Xref's(ASX:XF1) Share Price Is Down 49% Over The Past Three Years.

Xref Limited (ASX:XF1) shareholders will doubtless be very grateful to see the share price up 143% in the last quarter. But that doesn't help the fact that the three year return is less impressive. Truth be told the share price declined 49% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

See our latest analysis for Xref

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

Over three years, Xref grew revenue at 36% per year. That's well above most other pre-profit companies. While its revenue increased, the share price dropped at a rate of 14% per year. That seems like an unlucky result for holders. It's possible that the prior share price assumed unrealistically high future growth. Before considering a purchase, investors should consider how quickly expenses are growing, relative to revenue.

The graphic below depicts how earnings and revenue have changed over time (unveil 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

Xref shareholders are up 1.4% for the year. While you don't go broke making a profit, this return was actually lower than the average market return of about 5.7%. On the bright side, that's certainly better than the yearly loss of about 14% endured over the last three years, implying that the company is doing better recently. We hope the turnaround in fortunes continues. It's always interesting to track share price performance over the longer term. But to understand Xref better, we need to consider many other factors. Even so, be aware that Xref is showing 4 warning signs in our investment analysis , and 1 of those makes us a bit 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 AU exchanges.

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This article by Simply Wall St is general in nature. 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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