Investing in stocks inevitably means buying into some companies that perform poorly. Long term Basic-Fit N.V. (AMS:BFIT) shareholders know that all too well, since the share price is down considerably over three years. So they might be feeling emotional about the 52% share price collapse, in that time. Even worse, it's down 9.4% in about a month, which isn't fun at all. However, we note the price may have been impacted by the broader market, which is down 7.6% in the same time period.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

Check out our latest analysis for Basic-Fit

While Basic-Fit made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over three years, Basic-Fit grew revenue at 43% per year. That's well above most other pre-profit companies. In contrast, the share price is down 15% compound, over three years - disappointing by most standards. This could mean hype has come out of the stock because the losses are concerning investors. When we see revenue growth, paired with a falling share price, we can't help wonder if there is an opportunity for those who are willing to dig deeper.

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. So it makes a lot of sense to check out what analysts think Basic-Fit will earn in the future (free profit forecasts).

A Different Perspective

While the broader market gained around 16% in the last year, Basic-Fit shareholders lost 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. 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. 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 Basic-Fit better, we need to consider many other factors. Even so, be aware that Basic-Fit is showing 3 warning signs in our investment analysis , and 1 of those shouldn't be ignored...