The three-year earnings decline has likely contributed to3P Learning's (ASX:3PL) shareholders losses of 61% over that period

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the last three years have been particularly tough on longer term 3P Learning Limited (ASX:3PL) shareholders. So they might be feeling emotional about the 61% share price collapse, in that time. And over the last year the share price fell 51%, so we doubt many shareholders are delighted. Unfortunately the share price momentum is still quite negative, with prices down 23% in thirty days.

With the stock having lost 21% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Our free stock report includes 2 warning signs investors should be aware of before investing in 3P Learning. Read for free now.

3P Learning 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over three years, 3P Learning grew revenue at 8.2% per year. That's a pretty good rate of top-line growth. So some shareholders would be frustrated with the compound loss of 17% per year. The market must have had really high expectations to be disappointed with this progress. It would be well worth taking a closer look at the company, to determine growth trends (and balance sheet strength).

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

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While the broader market gained around 7.0% in the last year, 3P Learning shareholders lost 51%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% 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 3P Learning better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for 3P Learning you should know about.

We will like 3P Learning better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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.