It is a pleasure to report that the Delivery Hero SE (ETR:DHER) is up 34% in the last quarter. But only the myopic could ignore the astounding decline over three years. Indeed, the share price is down a whopping 73% in the last three years. So it sure is nice to see a bit of an improvement. But the more important question is whether the underlying business can justify a higher price still.

If the past week is anything to go by, investor sentiment for Delivery Hero isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Delivery Hero

Because Delivery Hero 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. 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, Delivery Hero saw its revenue grow by 38% per year, compound. That's well above most other pre-profit companies. So on the face of it we're really surprised to see the share price down 20% a year in the same time period. The share price makes us wonder if there is an issue with profitability. Ultimately, revenue growth doesn't amount to much if the business can't scale well. If the company is low on cash, it may have to raise capital soon.

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

Delivery Hero is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Delivery Hero in this interactive graph of future profit estimates.

A Different Perspective

While the broader market gained around 12% in the last year, Delivery Hero shareholders lost 19%. 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 4% per year over five years. 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. 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 Delivery Hero is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...