Swelling losses haven't held back gains for MarushohottaLtd (TSE:8105) shareholders since they're up 928% over 1 year

Marushohotta Co.,Ltd. (TSE:8105) shareholders might be rather concerned because the share price has dropped 30% in the last month. But over the last year the share price has taken off like one of Elon Musk's rockets. In fact, it is up 928% in that time. Arguably, the recent fall is to be expected after such a strong rise. The real question is whether the fundamental business performance can justify the strong increase over the long term. We love happy stories like this one. The company should be really proud of that performance!

Since the long term performance has been good but there's been a recent pullback of 13%, let's check if the fundamentals match the share price.

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Because MarushohottaLtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

MarushohottaLtd actually shrunk its revenue over the last year, with a reduction of 14%. So it's very confusing to see that the share price gained a whopping 928%. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. To us, a gain like this looks like speculation, but there might be historical trends to back it up.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We're pleased to report that MarushohottaLtd shareholders have received a total shareholder return of 928% over one year. That gain is better than the annual TSR over five years, which is 46%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand MarushohottaLtd better, we need to consider many other factors. For instance, we've identified 2 warning signs for MarushohottaLtd that you should be aware of.

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