Tata Steel Long Products' (NSE:TATASTLLP) Stock Price Has Reduced 61% In The Past Three Years

Tata Steel Long Products Limited (NSE:TATASTLLP) shareholders should be happy to see the share price up 26% in the last quarter. But over the last three years we've seen a quite serious decline. Indeed, the share price is down a tragic 61% in the last three years. So it is really good to see an improvement. After all, could be that the fall was overdone.

View our latest analysis for Tata Steel Long Products

Tata Steel Long Products 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, Tata Steel Long Products saw its revenue grow by 64% per year, compound. That's well above most other pre-profit companies. In contrast, the share price is down 17% compound, over three years - disappointing by most standards. This could mean hype has come out of the stock because the losses are concerning investors. When we see revenue growth, paired with a falling share price, we can't help wonder if there is an opportunity for those who are willing to dig deeper.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Tata Steel Long Products' financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We've already covered Tata Steel Long Products' share price action, but we should also mention its total shareholder return (TSR). 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. Its history of dividend payouts mean that Tata Steel Long Products' TSR, which was a 52% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

While the broader market lost about 2.6% in the twelve months, Tata Steel Long Products shareholders did even worse, losing 23%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2.0% 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 Tata Steel Long Products better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Tata Steel Long Products (at least 2 which are a bit unpleasant) , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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