S4 Capital (LON:SFOR) adds UK£38m to market cap in the past 7 days, though investors from three years ago are still down 84%

S4 Capital plc (LON:SFOR) shareholders should be happy to see the share price up 11% in the last week. But that is meagre solace in the face of the shocking decline over three years. To wit, the share price sky-dived 84% in that time. So it sure is nice to see a bit of an improvement. The thing to think about is whether the business has really turned around. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

The recent uptick of 11% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for S4 Capital

Because S4 Capital 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years, S4 Capital saw its revenue grow by 47% per year, compound. That's well above most other pre-profit companies. So why has the share priced crashed 23% per year, in the same time? You'd want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn't lead to profits. If the company is low on cash, it may have to raise capital soon.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at S4 Capital's financial health with this free report on its balance sheet.

A Different Perspective

S4 Capital shareholders are down 65% for the year, but the market itself is up 2.3%. 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 8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Case in point: We've spotted 2 warning signs for S4 Capital you should be aware of.

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 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.