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Long term investing is the way to go, but that doesn't mean you should hold every stock forever. It hits us in the gut when we see fellow investors suffer a loss. Spare a thought for those who held Advanced Holdings Ltd. (SGX:BLZ) for five whole years - as the share price tanked 84%. And we doubt long term believers are the only worried holders, since the stock price has declined 57% over the last twelve months. Shareholders have had an even rougher run lately, with the share price down 16% in the last 90 days.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Check out our latest analysis for Advanced Holdings
Advanced Holdings isn't a profitable company, so 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last five years Advanced Holdings saw its revenue shrink by 13% per year. That puts it in an unattractive cohort, to put it mildly. So it's not altogether surprising to see the share price down 31% per year in the same time period. This kind of price performance makes us very wary, especially when combined with falling revenue. Ironically, that behavior could create an opportunity for the contrarian investor - but only if there are good reasons to predict a brighter future.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling Advanced Holdings stock, you should check out this FREE detailed report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Advanced Holdings's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that Advanced Holdings's TSR, which was a 80% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
While the broader market gained around 4.1% in the last year, Advanced Holdings shareholders lost 57%. 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 28% over the last half decade. 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.