T
his week, Anywhere Real Estate Inc. (NYSE:HOUS) saw its share price surge by 17%, but the company's performance over the last three years has been dismal, with a staggering 79% decline in value. Shareholders are finally seeing some gains, but the question remains whether the underlying business can justify a higher price. Let's examine the longer-term fundamentals to see if they've contributed to the negative returns.

    As Anywhere Real Estate made a loss in the last twelve months, investors are likely focusing on revenue and growth for now. Typically, companies without profits aim to grow revenue annually at a decent rate. Over the past three years, however, the company's revenue dropped 15% per year, which is weaker than most pre-profit companies report. This decline has been reflected in the share price, which has fallen by 21% annually.

    Loss-making companies with falling revenue can be hazardous for investors, often referred to as "catching a falling knife." The image below shows how earnings and revenue have tracked over time (click on the image for greater detail).

    NYSE:HOUS Earnings and Revenue Growth January 18th 2025

    You can see how its balance sheet has evolved in this free interactive graphic. Despite being down 48% for the year, with the market up 26%, we need to see improvements in fundamental metrics before getting interested.

    Last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. We caution investors to ensure they're buying a high-quality business, rather than just following Baron Rothschild's advice to "buy when there is blood on the streets." To understand Anywhere Real Estate better, we need to consider many other factors.