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Teva Pharmaceutical Industries (NYSE:TEVA) investors are sitting on a loss of 76% if they invested five years ago

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We're definitely into long term investing, but some companies are simply bad investments over any time frame. It hits us in the gut when we see fellow investors suffer a loss. For example, we sympathize with anyone who was caught holding Teva Pharmaceutical Industries Limited (NYSE:TEVA) during the five years that saw its share price drop a whopping 77%. And it's not just long term holders hurting, because the stock is down 25% in the last year. More recently, the share price has dropped a further 14% in a month.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

Check out our latest analysis for Teva Pharmaceutical Industries

Because Teva Pharmaceutical Industries 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over half a decade Teva Pharmaceutical Industries reduced its trailing twelve month revenue by 8.7% for each year. That puts it in an unattractive cohort, to put it mildly. So it's not altogether surprising to see the share price down 12% 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.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

Teva Pharmaceutical Industries is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Teva Pharmaceutical Industries stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

We regret to report that Teva Pharmaceutical Industries shareholders are down 25% for the year. Unfortunately, that's worse than the broader market decline of 17%. 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 12% 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. It's always interesting to track share price performance over the longer term. But to understand Teva Pharmaceutical Industries better, we need to consider many other factors. Take risks, for example - Teva Pharmaceutical Industries has 1 warning sign we think you should be aware of.

But note: Teva Pharmaceutical Industries may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.