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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the TruFin plc (LON:TRU) share price slid 14% over twelve months. That falls noticeably short of the market decline of around 9.4%. The silver lining (for longer term investors) is that the stock is still 8.0% higher than it was three years ago. Furthermore, it's down 14% in about a quarter. That's not much fun for holders. However, one could argue that the price has been influenced by the general market, which is down 6.0% in the same timeframe.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
View our latest analysis for TruFin
TruFin isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In just one year TruFin saw its revenue fall by 12%. That's not what investors generally want to see. The stock price has languished lately, falling 14% in a year. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on TruFin's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
TruFin shareholders are down 14% for the year, falling short of the market return. The market shed around 9.4%, no doubt weighing on the stock price. Investors are up over three years, booking 2.7% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 4 warning signs for TruFin (2 don't sit too well with us) that you should be aware of.