The NAGA Group AG (ETR:N4G) shareholders should be happy to see the share price up 28% in the last quarter. But that isn't much consolation to those who have suffered through the declines of the last year. Specifically, the stock price slipped by 70% in that time. So the bounce should be viewed in that context. You could argue that the sell-off was too severe.

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 NAGA Group

NAGA Group 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 expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year NAGA Group saw its revenue grow by 87%. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 70%. This could mean hype has come out of the stock because the bottom line is concerning investors. Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. You can see what analysts are predicting for NAGA Group in this interactive graph of future profit estimates.

A Different Perspective

While the broader market lost about 10% in the twelve months, NAGA Group shareholders did even worse, losing 70%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with NAGA Group (including 1 which makes us a bit uncomfortable) .