4DMedical (ASX:4DX) shareholders are still up 194% over 1 year despite pulling back 17% in the past week

4DMedical Limited (ASX:4DX) shareholders might be rather concerned because the share price has dropped 33% in the last month. But that doesn't change the fact that the returns over the last year have been very strong. Like an eagle, the share price soared 194% in that time. So it is important to view the recent reduction in price through that lense. More important, going forward, is how the business itself is going.

While the stock has fallen 17% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

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Because 4DMedical made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.

4DMedical grew its revenue by 56% last year. That's a head and shoulders above most loss-making companies. Meanwhile, the market has paid attention, sending the share price soaring 194% in response. That sort of revenue growth is bound to attract attention, even if the company doesn't turn a profit. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

This free interactive report on 4DMedical'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 4DMedical has rewarded shareholders with a total shareholder return of 194% in the last twelve months. Notably the five-year annualised TSR loss of 5% per year compares very unfavourably with the recent share price performance. 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. It's always interesting to track share price performance over the longer term. But to understand 4DMedical better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for 4DMedical you should be aware of, and 2 of them make us uncomfortable.

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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.