Zamp (BVMF:ZAMP3 shareholders incur further losses as stock declines 11% this week, taking five-year losses to 67%

It is doubtless a positive to see that the Zamp S.A. (BVMF:ZAMP3) share price has gained some 58% in the last three months. But that can't change the reality that over the longer term (five years), the returns have been really quite dismal. In fact, the share price has declined rather badly, down some 67% in that time. Some might say the recent bounce is to be expected after such a bad drop. But it could be that the fall was overdone.

Since Zamp has shed R$200m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Zamp

Because Zamp 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over five years, Zamp grew its revenue at 10.0% per year. That's a fairly respectable growth rate. The share price, meanwhile, has fallen 11% compounded, over five years. That suggests the market is disappointed with the current growth rate. A pessimistic market can create opportunities.

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

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 6.3% in the last year, Zamp shareholders lost 3.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 11% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. 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. Take risks, for example - Zamp has 1 warning sign we think you should be aware of.

Of course Zamp may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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