Long term investing is the way to go, but that doesn't mean you should hold every stock forever. We really hate to see fellow investors lose their hard-earned money. For example, we sympathize with anyone who was caught holding GLI Finance Limited (LON:GLIF) during the five years that saw its share price drop a whopping 94%. And it's not just long term holders hurting, because the stock is down 59% in the last year. Shareholders have had an even rougher run lately, with the share price down 28% in the last 90 days.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Because GLI Finance is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong 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.
Over five years, GLI Finance grew its revenue at 9.8% per year. That's a fairly respectable growth rate. So it is unexpected to see the stock down 42% per year in the last five years. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at GLI Finance's financial health with this free report on its balance sheet.
A Different Perspective
While the broader market lost about 0.3% in the twelve months, GLI Finance shareholders did even worse, losing 59%. 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 40% 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.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.