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 SIGNA Sports United N.V. (NYSE:SSU) have tasted that bitter downside in the last year, as the share price dropped 31%. That falls noticeably short of the market decline of around 21%. We wouldn't rush to judgement on SIGNA Sports United because we don't have a long term history to look at.

With the stock having lost 3.8% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for SIGNA Sports United

Given that SIGNA Sports United 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 SIGNA Sports United saw its revenue grow by 24%. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 31%. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.

The graphic below depicts how earnings and revenue have changed over time (unveil 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

SIGNA Sports United shareholders are down 31% for the year, even worse than the market loss of 21%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 5.0%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand SIGNA Sports United better, we need to consider many other factors. For instance, we've identified 1 warning sign for SIGNA Sports United that you should be aware of.

We will like SIGNA Sports United better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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