Even though Nanoco Group (LON:NANO) has lost UK£8.1m market cap in last 7 days, shareholders are still up 177% over 3 years

Some Nanoco Group plc (LON:NANO) shareholders are probably rather concerned to see the share price fall 45% over the last three months. But in three years the returns have been great. The share price marched upwards over that time, and is now 177% higher than it was. It's not uncommon to see a share price retrace a bit, after a big gain. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

While the stock has fallen 11% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

Check out our latest analysis for Nanoco Group

Nanoco Group 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Nanoco Group actually saw its revenue drop by 49% per year over three years. So the share price gain of 40% per year is quite surprising. It's fair to say shareholders are definitely counting on a bright future.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

A Different Perspective

We're pleased to report that Nanoco Group shareholders have received a total shareholder return of 14% over one year. That certainly beats the loss of about 8% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Nanoco Group better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Nanoco Group (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

But note: Nanoco 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.