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Statistically speaking, long term investing is a profitable endeavour. But unfortunately, some companies simply don't succeed. For example the HG Metal Manufacturing Limited (SGX:BTG) share price dropped 73% over five years. That is extremely sub-optimal, to say the least. And some of the more recent buyers are probably worried, too, with the stock falling 27% in the last year.
View our latest analysis for HG Metal Manufacturing
Because HG Metal Manufacturing is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last five years HG Metal Manufacturing saw its revenue shrink by 2.6% per year. While far from catastrophic that is not good. The share price fall of 23% (per year, over five years) is a stern reminder that money-losing companies are expected to grow revenue. It takes a certain kind of mental fortitude (or recklessness) to buy shares in a company that loses money and doesn't grow revenue. Fear of becoming a 'bagholder' may be keeping people away from this stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
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.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between HG Metal Manufacturing's total shareholder return (TSR) and its share price change, which we've covered above. 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 HG Metal Manufacturing's TSR, which was a 66% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
Investors in HG Metal Manufacturing had a tough year, with a total loss of 27%, against a market gain of about 1.0%. 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 19% 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. Before spending more time on HG Metal Manufacturing it might be wise to click here to see if insiders have been buying or selling shares.