Even after rising 14% this past week, ContentreeJoongAng (KRX:036420) shareholders are still down 79% over the past three years

ContentreeJoongAng corp. (KRX:036420) shareholders should be happy to see the share price up 14% in the last week. But only the myopic could ignore the astounding decline over three years. To wit, the share price sky-dived 79% in that time. So it sure is nice to see a bit of an improvement. The thing to think about is whether the business has really turned around.

While the last three years has been tough for ContentreeJoongAng shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Check out our latest analysis for ContentreeJoongAng

Given that ContentreeJoongAng 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 three years, ContentreeJoongAng saw its revenue grow by 22% per year, compound. That's well above most other pre-profit companies. So on the face of it we're really surprised to see the share price down 21% a year in the same time period. You'd want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn't lead to profits. If the company is low on cash, it may have to raise capital soon.

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

ContentreeJoongAng is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for ContentreeJoongAng in this interactive graph of future profit estimates.

A Different Perspective

Investors in ContentreeJoongAng had a tough year, with a total loss of 23%, against a market gain of about 2.7%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% 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 ContentreeJoongAng better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with ContentreeJoongAng .

Of course ContentreeJoongAng 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 South Korean 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.