Gulf Cement Company P.S.C's(ADX:GCEM) Share Price Is Down 60% Over The Past Three Years.

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term Gulf Cement Company P.S.C. (ADX:GCEM) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 60% decline in the share price in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 29% lower in that time. On the other hand the share price has bounced 7.6% over the last week. The buoyant market could have helped drive the share price pop, since stocks are up 4.4% in the same period.

Check out our latest analysis for Gulf Cement Company P.S.C

Gulf Cement Company 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, Gulf Cement Company P.S.C's revenue dropped 16% per year. That's definitely a weaker result than most pre-profit companies report. With no profits and falling revenue it is no surprise that investors have been dumping the stock, pushing the price down by 17% per year over that time. Bagholders or 'baggies' are people who buy more of a stock as the price collapses. They are then left 'holding the bag' if the shares turn out to be worthless. It could be a while before the company repays long suffering shareholders with share price gains.

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

If you are thinking of buying or selling Gulf Cement Company P.S.C stock, you should check out this FREE detailed report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Gulf Cement Company P.S.C's total shareholder return (TSR) and its share price return. 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. Gulf Cement Company P.S.C's TSR of was a loss of 54% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

Investors in Gulf Cement Company P.S.C had a tough year, with a total loss of 29%, against a market gain of about 16%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Gulf Cement Company P.S.C (at least 1 which is significant) , and understanding them should be part of your investment process.

We will like Gulf Cement Company P.S.C better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

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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. 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.
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