The truth is that if you invest for long enough, you’re going to end up with some losing stocks. But the last three years have been particularly tough on longer term Ras Al Khaimah Poultry & Feeding Co. P.S.C. (ADX:RAPCO) shareholders. Unfortunately, they have held through a 62% decline in the share price in that time. Unhappily, the share price slid 4.7% in the last week.
Ras Al Khaimah Poultry & Feeding P.S.C 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. 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.
In the last three years Ras Al Khaimah Poultry & Feeding P.S.C saw its revenue shrink by 14% per year. That’s not what investors generally want to see. The share price decline of 27% compound, over three years, is understandable given the company doesn’t have profits to boast of, and revenue is moving in the wrong direction. Of course, it’s the future that will determine whether today’s price is a good one. We’d be pretty wary of this one until it makes a profit, because we don’t specialize in finding turnaround situations.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Ras Al Khaimah Poultry & Feeding P.S.C, it has a TSR of -59% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Ras Al Khaimah Poultry & Feeding P.S.C shareholders are down 16% over twelve months (even including dividends) , which isn’t far from the market return of -16%. Longer term investors wouldn’t be so upset, since they would have made 3.5%, each year, over five years. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. 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. Case in point: We’ve spotted 2 warning signs for Ras Al Khaimah Poultry & Feeding P.S.C you should be aware of, and 1 of them is significant.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AE exchanges.
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.
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