If you love investing in stocks you're bound to buy some losers. Long term TRX Gold Corporation (TSE:TRX) shareholders know that all too well, since the share price is down considerably over three years. Regrettably, they have had to cope with a 60% drop in the share price over that period. The more recent news is of little comfort, with the share price down 22% in a year. Shareholders have had an even rougher run lately, with the share price down 19% in the last 90 days.

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.

View our latest analysis for TRX Gold

Because TRX Gold 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 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, TRX Gold grew revenue at 105% per year. That's well above most other pre-profit companies. In contrast, the share price is down 17% compound, over three years - disappointing by most standards. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

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

We like that insiders have been buying shares in the last twelve months. 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 TRX Gold in this interactive graph of future profit estimates.

A Different Perspective

TRX Gold shareholders are down 22% for the year, but the market itself is up 2.2%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% per year over five years. 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with TRX Gold (at least 1 which can't be ignored) , and understanding them should be part of your investment process.