Further weakness as Nippon Sheet Glass Company (TSE:5202) drops 11% this week, taking one-year losses to 27%

It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Nippon Sheet Glass Company, Limited (TSE:5202) have tasted that bitter downside in the last year, as the share price dropped 27%. That falls noticeably short of the market decline of around 0.3%. At least the damage isn't so bad if you look at the last three years, since the stock is down 1.8% in that time. On top of that, the share price is down 11% in the last week. But this could be related to the soft market, which is down about 5.5% in the same period.

Since Nippon Sheet Glass Company has shed JP¥4.1b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Given that Nippon Sheet Glass Company 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 the last year Nippon Sheet Glass Company saw its revenue grow by 4.9%. That's not a very high growth rate considering it doesn't make profits. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 27% in a year. In a hot market it's easy to forget growth is the life-blood of a loss making company. But if you buy a loss making company then you could become a loss making investor.

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

Take a more thorough look at Nippon Sheet Glass Company's financial health with this free report on its balance sheet .

A Different Perspective

We regret to report that Nippon Sheet Glass Company shareholders are down 27% for the year. Unfortunately, that's worse than the broader market decline of 0.3%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. For example, we've discovered 1 warning sign for Nippon Sheet Glass Company that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Japanese exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.