Further weakness as Dialight (LON:DIA) drops 12% this week, taking five-year losses to 56%

We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. Zooming in on an example, the Dialight plc (LON:DIA) share price dropped 56% in the last half decade. That's an unpleasant experience for long term holders. More recently, the share price has dropped a further 16% in a month.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Check out our latest analysis for Dialight

Dialight 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last five years Dialight saw its revenue shrink by 8.3% per year. That's not what investors generally want to see. The share price decline of 9% compound, over five years, is understandable given the company is losing money, and revenue is moving in the wrong direction. The chance of imminent investor enthusiasm for this stock seems slimmer than Louise Brooks. Ultimately, it may be worth watching - should revenue pick up, the share price might follow.

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

This free interactive report on Dialight's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Dialight has rewarded shareholders with a total shareholder return of 21% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 9% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. Before spending more time on Dialight it might be wise to click here to see if insiders have been buying or selling shares.

But note: Dialight 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 GB exchanges.

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.

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