Shareholders in K3 Business Technology Group (LON:KBT) have lost 58%, as stock drops 11% this past week

Generally speaking long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example the K3 Business Technology Group plc (LON:KBT) share price dropped 58% over five years. That is extremely sub-optimal, to say the least. And some of the more recent buyers are probably worried, too, with the stock falling 22% in the last year. The falls have accelerated recently, with the share price down 18% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

If the past week is anything to go by, investor sentiment for K3 Business Technology Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for K3 Business Technology Group

K3 Business Technology Group 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 desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last five years K3 Business Technology Group saw its revenue shrink by 9.9% per year. That's definitely a weaker result than most pre-profit companies report. Arguably, the market has responded appropriately to this business performance by sending the share price down 10% (annualized) in the same time period. It's fair to say most investors don't like to invest in loss making companies with falling revenue. This looks like a really risky stock to buy, at a glance.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on K3 Business Technology Group's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Investors in K3 Business Technology Group had a tough year, with a total loss of 22%, against a market gain of about 11%. 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 10% over the last half decade. 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 K3 Business Technology Group better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with K3 Business Technology Group (including 1 which makes us a bit uncomfortable) .

But note: K3 Business Technology 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.