Further weakness as mdf commerce (TSE:MDF) drops 10% this week, taking five-year losses to 62%

mdf commerce inc. (TSE:MDF) shareholders should be happy to see the share price up 13% in the last month. But that is little comfort to those holding over the last half decade, sitting on a big loss. The share price has failed to impress anyone , down a sizable 64% during that time. Some might say the recent bounce is to be expected after such a bad drop. Of course, this could be the start of a turnaround.

Since mdf commerce has shed CA$19m 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 mdf commerce

mdf commerce isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong 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 five years, mdf commerce grew its revenue at 11% per year. That's a fairly respectable growth rate. The share price return isn't so respectable with an annual loss of 10% over the period. That suggests the market is disappointed with the current growth rate. A pessimistic market can create opportunities.

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

If you are thinking of buying or selling mdf commerce stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that mdf commerce shareholders have received a total shareholder return of 22% over the last year. That certainly beats the loss of about 10% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for mdf commerce (1 shouldn't be ignored) that you should be aware of.

Of course mdf commerce 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 Canadian 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.