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While it may not be enough for some shareholders, we think it is good to see the Sin Heng Heavy Machinery Limited (SGX:BKA) share price up 12% in a single quarter. But don't envy holders -- looking back over 5 years the returns have been really bad. In that time the share price has delivered a rude shock to holders, who find themselves down 67% after a long stretch. So is the recent increase sufficient to restore confidence in the stock? Not yet. But it could be that the fall was overdone.
View our latest analysis for Sin Heng Heavy Machinery
Sin Heng Heavy Machinery wasn't profitable in the last twelve months, 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last five years Sin Heng Heavy Machinery saw its revenue shrink by 19% per year. That puts it in an unattractive cohort, to put it mildly. It seems appropriate, then, that the share price slid about 20% annually during that time. It's fair to say most investors don't like to invest in loss making companies with falling revenue. You'd want to research this company pretty thoroughly before buying, it looks a bit too risky for us.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Sin Heng Heavy Machinery's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Sin Heng Heavy Machinery's TSR, which was a 64% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
Investors in Sin Heng Heavy Machinery had a tough year, with a total loss of 3.3%, against a market gain of about 1.6%. 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. However, the loss over the last year isn't as bad as the 18% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Sin Heng Heavy Machinery (of which 1 shouldn't be ignored!) you should know about.