KHD Humboldt Wedag International (ETR:KWG) shareholder returns have been favorable, earning 57% in 3 years

By buying an index fund, investors can approximate the average market return. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. Just take a look at KHD Humboldt Wedag International AG ( ETR:KWG ), which is up 57%, over three years, soundly beating the market decline of 3.3% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 15%.

Since it's been a strong week for KHD Humboldt Wedag International shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for KHD Humboldt Wedag International

We don't think that KHD Humboldt Wedag International's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over the last three years KHD Humboldt Wedag International has grown its revenue at 20% annually. That's a very respectable growth rate. The share price gain of 16% per year shows that the market is paying attention to this growth. If that's the case, then it could be well worth while to research the growth trajectory. Of course, it's always worth considering funding risks when a company isn't profitable.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

A Different Perspective

KHD Humboldt Wedag International's TSR for the year was broadly in line with the market average, at 15%. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 4%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for KHD Humboldt Wedag International. 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 example, we've discovered 2 warning signs for KHD Humboldt Wedag International (1 is a bit unpleasant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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