home24 (ETR:H24) pulls back 11% this week, but still delivers shareholders strong 27% CAGR over 3 years

home24 SE (ETR:H24) shareholders might be concerned after seeing the share price drop 25% in the last quarter. In contrast, the return over three years has been impressive. In fact, the share price is up a full 104% compared to three years ago. So the recent fall in the share price should be viewed in that context. The thing to consider is whether the underlying business is doing well enough to support the current price.

Although home24 has shed €24m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for home24

home24 wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years home24 has grown its revenue at 19% annually. That's pretty nice growth. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 27% per year over three years. It's hard to value pre-profit businesses, but it seems like the market has become a lot more optimistic about this one! It would be worth thinking about when profits will flow, since that milestone will attract more attention.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on home24's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

home24 shareholders are down 21% for the year, falling short of the market return. The market shed around 11%, no doubt weighing on the stock price. Investors are up over three years, booking 27% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. It's always interesting to track share price performance over the longer term. But to understand home24 better, we need to consider many other factors. Take risks, for example - home24 has 2 warning signs we think you should be aware of.

Of course home24 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 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.