If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Serko Limited (NZSE:SKO) have had an unfortunate run in the last three years. Sadly for them, the share price is down 57% in that time. Shareholders have had an even rougher run lately, with the share price down 17% 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.

See our latest analysis for Serko

Serko wasn't profitable in the last twelve months, 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. When a company doesn't make profits, we'd generally hope 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, Serko grew revenue at 60% per year. That is faster than most pre-profit companies. The share price has moved in quite the opposite direction, down 16% over that time, a bad result. This could mean hype has come out of the stock because the losses are concerning investors. 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).

If you are thinking of buying or selling Serko stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Serko shareholders are down 10.0% for the year. Unfortunately, that's worse than the broader market decline of 0.02%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Serko better, we need to consider many other factors. For example, we've discovered 1 warning sign for Serko that you should be aware of before investing here.