Dialight plc (LON:DIA) shareholders should be happy to see the share price up 20% in the last quarter. But that is little comfort to those holding over the last half decade, sitting on a big loss. In fact, the share price has declined rather badly, down some 68% in that time. So is the recent increase sufficient to restore confidence in the stock? Not yet. But it could be that the fall was overdone.

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.

Check out our latest analysis for Dialight

Dialight isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over five years, Dialight grew its revenue at 0.2% per year. That's far from impressive given all the money it is losing. It's likely this weak growth has contributed to an annualised return of 11% for the last five years. We'd want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in Dialight. However, it's possible too many in the market will ignore it, and there may be an opportunity if it starts to recover down the track.

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

Dialight shareholders are down 22% for the year, but the market itself is up 11%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% 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 Dialight better, we need to consider many other factors. For example, we've discovered 2 warning signs for Dialight that you should be aware of before investing here.

Of course Dialight may not be the best stock to buy. So you may wish to see this free collection of growth stocks.