Investors might be losing patience for Synertec's (ASX:SOP) increasing losses, as stock sheds 11% over the past week

It's been a soft week for Synertec Corporation Limited (ASX:SOP) shares, which are down 11%. But that doesn't displace its brilliant performance over three years. Over that time, we've been excited to watch the share price climb an impressive 365%. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. The only way to form a view of whether the current price is justified is to consider the merits of the business itself.

While the stock has fallen 11% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

See our latest analysis for Synertec

Synertec isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

Synertec's revenue trended up 17% each year over three years. That's a very respectable growth rate. Some shareholders might think that the share price rise of 67% per year is a lucky result, considering the level of revenue growth. A hot stock like this is usually well worth taking a closer look at, as long as you don't let the fear of missing out (FOMO) impact your thinking.

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

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

A Different Perspective

It's good to see that Synertec has rewarded shareholders with a total shareholder return of 11% in the last twelve months. However, the TSR over five years, coming in at 34% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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 instance, we've identified 4 warning signs for Synertec (1 shouldn't be ignored) that you should be aware of.

We will like Synertec better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

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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.