If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Heidelberg Pharma AG (ETR:HPHA) have had an unfortunate run in the last three years. Sadly for them, the share price is down 62% in that time. And more recent buyers are having a tough time too, with a drop of 26% in the last year. Shareholders have had an even rougher run lately, with the share price down 13% in the last 90 days.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

See our latest analysis for Heidelberg Pharma

Given that Heidelberg Pharma 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.

Over three years, Heidelberg Pharma grew revenue at 24% per year. That is faster than most pre-profit companies. The share price has moved in quite the opposite direction, down 17% over that time, a bad result. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Heidelberg Pharma's financial health with this free report on its balance sheet.

A Different Perspective

Investors in Heidelberg Pharma had a tough year, with a total loss of 26%, against a market gain of about 9.4%. 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. Longer term investors wouldn't be so upset, since they would have made 2%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Heidelberg Pharma is showing 3 warning signs in our investment analysis , and 2 of those are significant...