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 Phreesia, Inc. (NYSE:PHR) have had an unfortunate run in the last three years. So they might be feeling emotional about the 64% share price collapse, in that time. But it's up 7.6% in the last week. But this could be related to the strong market, with stocks up around 4.5% in the same time.

On a more encouraging note the company has added US$93m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

Phreesia 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.

In the last three years, Phreesia saw its revenue grow by 27% per year, compound. That's well above most other pre-profit companies. In contrast, the share price is down 18% compound, over three years - disappointing by most standards. 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.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Phreesia is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.

A Different Perspective

Investors in Phreesia had a tough year, with a total loss of 17%, against a market gain of about 24%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Phreesia better, we need to consider many other factors. For example, we've discovered 3 warning signs for Phreesia that you should be aware of before investing here.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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