Nectar Lifesciences (NSE:NECLIFE) investors are up 13% in the past week, but earnings have declined over the last five years

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, you can make far more than 100% on a really good stock. Long term Nectar Lifesciences Limited (NSE:NECLIFE) shareholders would be well aware of this, since the stock is up 107% in five years. It's even up 13% in the last week.

Since the stock has added ₹872m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Nectar Lifesciences

Given that Nectar Lifesciences only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last 5 years Nectar Lifesciences saw its revenue shrink by 13% per year. Given that scenario, we wouldn't have expected the share price to rise 16% per year, but that's what it did. It just goes to show tht the market is forward looking, and it's not always easy to predict the future based on past trends. Still, this situation makes us a little wary of the stock.

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

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

A Different Perspective

It's good to see that Nectar Lifesciences has rewarded shareholders with a total shareholder return of 85% in the last twelve months. That's better than the annualised return of 16% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Even so, be aware that Nectar Lifesciences is showing 3 warning signs in our investment analysis , and 2 of those are a bit concerning...

Of course Nectar Lifesciences 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 Indian 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.