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Investing in stocks inevitably means buying into some companies that perform poorly. Long term Hazer Group Limited (ASX:HZR) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 57% in that time. And more recent buyers are having a tough time too, with a drop of 43% in the last year. Even worse, it's down 23% in about a month, which isn't fun at all.
After losing 12% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
Check out our latest analysis for Hazer Group
Hazer Group wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good 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, Hazer Group saw its revenue grow by 3.5% per year, compound. Given it's losing money in pursuit of growth, we are not really impressed with that. It's likely this weak growth has contributed to an annualised return of 16% for the last three years. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. After all, growing a business isn't easy, and the process will not always be smooth.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So it makes a lot of sense to check out what analysts think Hazer Group will earn in the future (free profit forecasts).
A Different Perspective
While the broader market gained around 11% in the last year, Hazer Group shareholders lost 41%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 9% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. To that end, you should be aware of the 4 warning signs we've spotted with Hazer Group .