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 UEM Sunrise Berhad (KLSE:UEMS) for five whole years - as the share price tanked 82%. We also note that the stock has performed poorly over the last year, with the share price down 49%. The falls have accelerated recently, with the share price down 36% in the last three months. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
Check out our latest analysis for UEM Sunrise Berhad
Because UEM Sunrise Berhad 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 expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over half a decade UEM Sunrise Berhad reduced its trailing twelve month revenue by 8.9% for each year. That puts it in an unattractive cohort, to put it mildly. So it's not that strange that the share price dropped 13% per year in that 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 graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
UEM Sunrise Berhad 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 UEM Sunrise Berhad in this interactive graph of future profit estimates.
A Different Perspective
While the broader market lost about 5.8% in the twelve months, UEM Sunrise Berhad shareholders did even worse, losing 49%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 13% over the last half decade. 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. 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. Even so, be aware that UEM Sunrise Berhad is showing 1 warning sign in our investment analysis , you should know about...