Sterlite Technologies' (NSE:STLTECH five-year decrease in earnings delivers investors with a 31% loss

Ideally, your overall portfolio should beat the market average. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in Sterlite Technologies Limited (NSE:STLTECH), since the last five years saw the share price fall 50%. Furthermore, it's down 20% in about a quarter. That's not much fun for holders.

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

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Given that Sterlite Technologies only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over half a decade Sterlite Technologies reduced its trailing twelve month revenue by 2.2% for each year. While far from catastrophic that is not good. The share price decline at a rate of 8% per year is disappointing. Unfortunately, though, it makes sense given the lack of either profits or revenue growth. It might be worth watching for signs of a turnaround - buyers are probably expecting one.

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

We know that Sterlite Technologies has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Sterlite Technologies

What About The Total Shareholder Return (TSR)?

We've already covered Sterlite Technologies' share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Sterlite Technologies' TSR of was a loss of 31% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

We're pleased to report that Sterlite Technologies shareholders have received a total shareholder return of 14% over one year. That certainly beats the loss of about 6% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Sterlite Technologies (1 can't be ignored!) that you should be aware of before investing here.

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 Indian 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.