Investors Who Bought GVK Power & Infrastructure (NSE:GVKPIL) Shares Five Years Ago Are Now Down 57%

Statistically speaking, long term investing is a profitable endeavour. But along the way some stocks are going to perform badly. To wit, the GVK Power & Infrastructure Limited (NSE:GVKPIL) share price managed to fall 57% over five long years. That is extremely sub-optimal, to say the least. And it's not just long term holders hurting, because the stock is down 41% in the last year. The last week also saw the share price slip down another 5.4%.

Check out our latest analysis for GVK Power & Infrastructure

Because GVK Power & Infrastructure is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last half decade, GVK Power & Infrastructure saw its revenue increase by 6.0% per year. That's not a very high growth rate considering it doesn't make profits. It's likely this weak growth has contributed to an annualised return of 16% for the last five years. We want to see an acceleration of revenue growth (or profits) before showing much interest in this one. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term).

The graphic below depicts how earnings and revenue have changed over time.

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

Investors in GVK Power & Infrastructure had a tough year, with a total loss of 41%, against a market gain of about 7.1%. 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 16% 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. You could get a better understanding of GVK Power & Infrastructure's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

But note: GVK Power & Infrastructure 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 IN exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.