This month, we saw the Spirit Technology Solutions Ltd (ASX:ST1) up an impressive 35%. But only the myopic could ignore the astounding decline over three years. Indeed, the share price is down a whopping 79% in the last three years. So we're relieved for long term holders to see a bit of uplift. Of course the real question is whether the business can sustain a turnaround.

While the last three years has been tough for Spirit Technology Solutions shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

See our latest analysis for Spirit Technology Solutions

Spirit Technology Solutions 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 desire strong 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.

Over three years, Spirit Technology Solutions grew revenue at 13% per year. That's a fairly respectable growth rate. So it's hard to believe the share price decline of 21% per year is due to the revenue. More likely, the market was spooked by the cost of that revenue. This is exactly why investors need to diversify - even when a loss making company grows revenue, it can fail to deliver for shareholders.

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

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. Dive deeper into the earnings by checking this interactive graph of Spirit Technology Solutions' earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Spirit Technology Solutions shareholders have received a total shareholder return of 41% over the last year. Notably the five-year annualised TSR loss of 12% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Spirit Technology Solutions better, we need to consider many other factors. For example, we've discovered 3 warning signs for Spirit Technology Solutions (2 are significant!) that you should be aware of before investing here.