Investing in Nanoco Group (LON:NANO) three years ago would have delivered you a 184% gain

Some Nanoco Group plc (LON:NANO) shareholders are probably rather concerned to see the share price fall 44% over the last three months. In contrast, the return over three years has been impressive. The share price marched upwards over that time, and is now 184% higher than it was. To some, the recent share price pullback wouldn't be surprising after such a good run. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for Nanoco Group

Nanoco Group 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 expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Nanoco Group actually saw its revenue drop by 49% per year over three years. So the share price gain of 42% per year is quite surprising. It's fair to say shareholders are definitely counting on a bright future.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

This free interactive report on Nanoco Group's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Nanoco Group shareholders have received a total shareholder return of 24% over the last year. There's no doubt those recent returns are much better than the TSR loss of 6% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the 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. For example, we've discovered 4 warning signs for Nanoco Group (1 is a bit unpleasant!) that you should be aware of before investing here.

But note: Nanoco Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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