Way 2 Vat (ASX:W2V) shareholders are up 33% this past week, but still in the red over the last year

Way 2 Vat Ltd (ASX:W2V) shareholders are doubtless heartened to see the share price bounce 33% in just one week. But in truth the last year hasn't been good for the share price. In fact, the price has declined 40% in a year, falling short of the returns you could get by investing in an index fund.

While the last year has been tough for Way 2 Vat shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

See our latest analysis for Way 2 Vat

Given that Way 2 Vat didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. 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.

In the last year Way 2 Vat saw its revenue grow by 48%. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 40% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Way 2 Vat's financial health with this free report on its balance sheet.

What About The Total Shareholder Return (TSR)?

We've already covered Way 2 Vat's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Way 2 Vat hasn't been paying dividends, but its TSR of -30% exceeds its share price return of -40%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

Given that the market gained 10% in the last year, Way 2 Vat shareholders might be miffed that they lost 30%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 29%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. Even so, be aware that Way 2 Vat is showing 6 warning signs in our investment analysis , and 5 of those are potentially serious...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.