MRV Engenharia e Participações (BVMF:MRVE3) shareholders are up 8.5% this past week, but still in the red over the last five years

Statistically speaking, long term investing is a profitable endeavour. But that doesn't mean long term investors can avoid big losses. For example the MRV Engenharia e Participações S.A. (BVMF:MRVE3) share price dropped 60% over five years. That's not a lot of fun for true believers. We also note that the stock has performed poorly over the last year, with the share price down 44%. On the other hand the share price has bounced 8.5% over the last week.

While the stock has risen 8.5% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Check out our latest analysis for MRV Engenharia e Participações

MRV Engenharia e Participações 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. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over five years, MRV Engenharia e Participações grew its revenue at 4.4% per year. That's far from impressive given all the money it is losing. It's likely this weak growth has contributed to an annualised return of 10% for the last five years. We'd want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in MRV Engenharia e Participações. However, it's possible too many in the market will ignore it, and there may be an opportunity if it starts to recover down the track.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

MRV Engenharia e Participações is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between MRV Engenharia e Participações' total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for MRV Engenharia e Participações shareholders, and that cash payout explains why its total shareholder loss of 54%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

Investors in MRV Engenharia e Participações had a tough year, with a total loss of 44%, against a market gain of about 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. 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 MRV Engenharia e Participações better, we need to consider many other factors. For instance, we've identified 1 warning sign for MRV Engenharia e Participações that you should be aware of.

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 Brazilian exchanges.

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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.