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The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in FRIWO AG (ETR:CEA) have tasted that bitter downside in the last year, as the share price dropped 28%. That falls noticeably short of the market return of around 7.4%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 4.8% in three years. Even worse, it's down 17% in about a month, which isn't fun at all. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
Check out our latest analysis for FRIWO
FRIWO isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In just one year FRIWO saw its revenue fall by 46%. That looks pretty grim, at a glance. The stock price has languished lately, falling 28% in a year. That seems pretty reasonable given the lack of both profits and revenue growth. It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling FRIWO stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
FRIWO shareholders are down 28% for the year, but the market itself is up 7.4%. 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. On the bright side, long term shareholders have made money, with a gain of 0.7% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand FRIWO better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with FRIWO (including 1 which makes us a bit uncomfortable) .