The Children's Place, Inc. (NASDAQ:PLCE) has rebounded strongly over the last week, with the share price soaring 64%. But only the myopic could ignore the astounding decline over three years. In that time the share price has melted like a snowball in the desert, down 89%. Arguably, the recent bounce is to be expected after such a bad drop. But the more important question is whether the underlying business can justify a higher price still. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

The recent uptick of 64% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for Children's Place

Children's Place wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last three years Children's Place saw its revenue shrink by 5.2% per year. That's not what investors generally want to see. The share price fall of 24% (per year, over three years) is a stern reminder that money-losing companies are expected to grow revenue. This business clearly needs to grow revenues if it is to perform as investors hope. Don't let a share price decline ruin your calm. You make better decisions when you're calm.

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 Children's Place's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market gained around 24% in the last year, Children's Place shareholders lost 62%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 14% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Children's Place better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Children's Place , and understanding them should be part of your investment process.