While it may not be enough for some shareholders, we think it is good to see the i3 Verticals, Inc. (NASDAQ:IIIV) share price up 19% in a single quarter. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 28% in the last three years, significantly under-performing the market.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

See our latest analysis for i3 Verticals

Given that i3 Verticals only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over three years, i3 Verticals grew revenue at 28% per year. That's well above most other pre-profit companies. While its revenue increased, the share price dropped at a rate of 8% per year. That seems like an unlucky result for holders. It seems likely that actual growth fell short of shareholders' expectations. Before considering a purchase, investors should consider how quickly expenses are growing, relative to revenue.

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

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for i3 Verticals in this interactive graph of future profit estimates.

A Different Perspective

Investors in i3 Verticals had a tough year, with a total loss of 4.3%, against a market gain of about 27%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.7% 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. It's always interesting to track share price performance over the longer term. But to understand i3 Verticals better, we need to consider many other factors. For instance, we've identified 2 warning signs for i3 Verticals (1 is concerning) that you should be aware of.