Those Who Purchased NexJ Systems (TSE:NXJ) Shares A Year Ago Have A 39% Loss To Show For It

It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in NexJ Systems Inc. (TSE:NXJ) have tasted that bitter downside in the last year, as the share price dropped 39%. That's disappointing when you consider the market returned 7.8%. At least the damage isn't so bad if you look at the last three years, since the stock is down 27% in that time. On top of that, the share price has dropped a further 14% in a month.

View our latest analysis for NexJ Systems

NexJ Systems 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

NexJ Systems's revenue didn't grow at all in the last year. In fact, it fell 18%. That looks pretty grim, at a glance. The stock price has languished lately, falling 39% in a year. That seems pretty reasonable given the lack of both profits and revenue growth. It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.

Balance sheet strength is crucual. It might be well worthwhile taking a look at our freereport on how its financial position has changed over time.

A Different Perspective

While the broader market gained around 7.8% in the last year, NexJ Systems shareholders lost 39%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6.3% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

Of course NexJ Systems may not be the best stock to buy. So you may wish to see this freecollection of growth stocks.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.