The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the The NAGA Group AG (ETR:N4G) share price slid 40% over twelve months. That's well bellow the market return of -9.2%. We wouldn't rush to judgement on NAGA Group because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 21% in the last 90 days.
NAGA Group isn't a profitable company, so 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
NAGA Group grew its revenue by 26% over the last year. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 40%. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
This free interactive report on NAGA Group's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt NAGA Group shareholders are happy with the loss of 40% over twelve months. That falls short of the market, which lost 9.2%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 21%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. You could get a better understanding of NAGA Group's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on DE exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.