Does Basic-Fit's (AMS:BFIT) Share Price Gain of 64% Match Its Business Performance?

By buying an index fund, investors can approximate the average market return. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Basic-Fit N.V. (AMS:BFIT) shareholders have seen the share price rise 64% over three years, well in excess of the market return (8.9%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 15% in the last year.

Check out our latest analysis for Basic-Fit

Because Basic-Fit 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 expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 3 years Basic-Fit saw its revenue grow at 18% per year. That's pretty nice growth. The share price gain of 18% per year shows that the market is paying attention to this growth. If that's the case, then it could be well worth while to research the growth trajectory. Keep in mind that the strength of the balance sheet impacts the options open to the company.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

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

Basic-Fit produced a TSR of 15% over the last year. It's always nice to make money but this return falls short of the market return which was about 23% for the year. At least the longer term returns (running at about 18% a year, are better. Even the best companies don't see strong share price performance every year. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Basic-Fit you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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This article by Simply Wall St is general in nature. 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.
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