SJM Holdings (HKG:880 shareholders incur further losses as stock declines 3.2% this week, taking five-year losses to 65%

Generally speaking long term investing is the way to go. But no-one is immune from buying too high. Zooming in on an example, the SJM Holdings Limited (HKG:880) share price dropped 68% in the last half decade. That's not a lot of fun for true believers. And it's not just long term holders hurting, because the stock is down 27% in the last year. The falls have accelerated recently, with the share price down 23% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 9.2% in the same timeframe.

After losing 3.2% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for SJM Holdings

Because SJM Holdings 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over half a decade SJM Holdings reduced its trailing twelve month revenue by 28% for each year. That's definitely a weaker result than most pre-profit companies report. It seems appropriate, then, that the share price slid about 11% annually during that time. It's fair to say most investors don't like to invest in loss making companies with falling revenue. This looks like a really risky stock to buy, at a glance.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free report showing analyst forecasts should help you form a view on SJM Holdings

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between SJM Holdings' 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. Dividends have been really beneficial for SJM Holdings shareholders, and that cash payout explains why its total shareholder loss of 65%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

Investors in SJM Holdings had a tough year, with a total loss of 27%, against a market gain of about 4.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand SJM Holdings better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with SJM Holdings .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar).

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