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Investors three-year losses grow to 80% as the stock sheds US$33m this past week

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·3 min read
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While not a mind-blowing move, it is good to see that the Phoenix Global Resources plc (LON:PGR) share price has gained 15% in the last three months. But only the myopic could ignore the astounding decline over three years. To wit, the share price sky-dived 80% in that time. So we're relieved for long term holders to see a bit of uplift. The thing to think about is whether the business has really turned around.

After losing 21% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Phoenix Global Resources

Because Phoenix Global Resources made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years, Phoenix Global Resources' revenue dropped 27% per year. That means its revenue trend is very weak compared to other loss making companies. The swift share price decline at an annual compound rate of 22%, reflects this weak fundamental performance. We prefer leave it to clowns to try to catch falling knives, like this stock. There is a good reason that investors often describe buying a sharply falling stock price as 'trying to catch a falling knife'. Think about it.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

This free interactive report on Phoenix Global Resources' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

The last twelve months weren't great for Phoenix Global Resources shares, which cost holders 50%, while the market was up about 27%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 22% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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. Case in point: We've spotted 3 warning signs for Phoenix Global Resources you should be aware of, and 1 of them can't be ignored.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.