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If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Heidelberger Druckmaschinen Aktiengesellschaft (ETR:HDD) have had an unfortunate run in the last three years. So they might be feeling emotional about the 60% share price collapse, in that time. The falls have accelerated recently, with the share price down 13% in the last three months.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
View our latest analysis for Heidelberger Druckmaschinen
Heidelberger Druckmaschinen isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last three years, Heidelberger Druckmaschinen saw its revenue grow by 4.7% per year, compound. That's not a very high growth rate considering it doesn't make profits. It's likely this weak growth has contributed to an annualised return of 17% for the last three years. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). Keep in mind it isn't unusual for good businesses to have a tough time or a couple of uninspiring years.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
While the broader market gained around 23% in the last year, Heidelberger Druckmaschinen shareholders lost 12%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. You could get a better understanding of Heidelberger Druckmaschinen's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.