Raiz Invest (ASX: RZI) shareholders are still up 76% over 3 years despite pulling back 10% in the past week

The last three months have been tough on Raiz Invest Limited (ASX: RZI) shareholders, who have seen the share price decline a rather worrying 39%. But over three years, the returns would have left most investors smiling In the last three years the share price is up, 76%: better than the market.

While this past week has detracted from the company’s three-year return, let’s look at the recent trends of the underlying business and see if the gains have been in alignment.

View our latest analysis for Raiz Invest

Because Raiz Invest 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Raiz Invest saw its revenue grow at 41% per year. That’s well above most pre-profit companies. While the compound gain of 21% per year over three years is pretty good, you might argue it doesn’t fully reflect the strong revenue growth. If that’s the case, now might be the time to take a close look at Raiz Invest. A window of opportunity may reveal itself with time, if the business can trend to profitability.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here ..

A Different Perspective

Raiz Invest shareholders are down 36% for the year, but the broader market is up 6.5%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Investors are up over three years, booking 21% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it’s turns out to be an opportunity, but you really need to be sure that the quality is there. 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. Even so, be aware that Raiz Invest is showing 3 warning signs in our investment analysis you should know about …

Raiz Invest is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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