Investors are selling off Sun Pharma Advanced Research (NSE:SPARC), lack of profits no doubt contribute to shareholders one-year loss

Even the best stock pickers will make plenty of bad investments. Anyone who held Sun Pharma Advanced Research Company Limited (NSE:SPARC) over the last year knows what a loser feels like. The share price is down a hefty 52% in that time. Notably, shareholders had a tough run over the longer term, too, with a drop of 41% in the last three years. More recently, the share price has dropped a further 15% in a month.

After losing 9.2% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Check out our latest analysis for Sun Pharma Advanced Research

Given that Sun Pharma Advanced Research didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In just one year Sun Pharma Advanced Research saw its revenue fall by 73%. If you think that's a particularly bad result, you're statistically on the money It's no surprise, then, that investors dumped the stock like it was garbage, sending the share price down 52%. Buying shares in loss making companies with falling revenue is often called speculation, not investing. This company will really need to improve on the numbers before we get excited about it.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

If you are thinking of buying or selling Sun Pharma Advanced Research stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market gained around 15% in the last year, Sun Pharma Advanced Research shareholders lost 52%. 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 0.5% 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for Sun Pharma Advanced Research that you should be aware of before investing here.

But note: Sun Pharma Advanced Research 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 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.