Further weakness as IG Design Group (LON:IGR) drops 10% this week, taking five-year losses to 89%

Long term investing works well, but it doesn't always work for each individual stock. We don't wish catastrophic capital loss on anyone. Anyone who held IG Design Group plc (LON:IGR) for five years would be nursing their metaphorical wounds since the share price dropped 89% in that time. And it's not just long term holders hurting, because the stock is down 64% in the last year. Shareholders have had an even rougher run lately, with the share price down 19% in the last 90 days. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

With the stock having lost 10% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

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Because IG Design Group 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last five years IG Design Group saw its revenue shrink by 0.3% per year. That's not what investors generally want to see. The share price fall of 14% (per year, over five years) is a stern reminder that money-losing companies are expected to grow revenue. We're generally averse to companies with declining revenues, but we're not alone in that. That is not really what the successful investors we know aim for.

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

Take a more thorough look at IG Design Group's financial health with this free report on its balance sheet.

A Different Perspective

IG Design Group shareholders are down 64% for the year, but the market itself is up 21%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 14% per year over five years. We realise that Baron Rothschild 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 business. It's always interesting to track share price performance over the longer term. But to understand IG Design Group better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for IG Design Group you should be aware of, and 1 of them can't be ignored.

But note: IG Design Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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