Lotte Chemical Titan Holding Berhad (KLSE:LCTITAN shareholders incur further losses as stock declines 11% this week, taking five-year losses to 70%

Generally speaking long term investing is the way to go. But unfortunately, some companies simply don't succeed. To wit, the Lotte Chemical Titan Holding Berhad (KLSE:LCTITAN) share price managed to fall 77% over five long years. That is extremely sub-optimal, to say the least. And some of the more recent buyers are probably worried, too, with the stock falling 44% in the last year. Furthermore, it's down 25% in about a quarter. That's not much fun for holders.

Since Lotte Chemical Titan Holding Berhad has shed RM148m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

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Lotte Chemical Titan Holding Berhad 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Over half a decade Lotte Chemical Titan Holding Berhad reduced its trailing twelve month revenue by 2.4% for each year. That's not what investors generally want to see. If a business loses money, you want it to grow, so no surprises that the share price has dropped 12% each year in that time. It takes a certain kind of mental fortitude (or recklessness) to buy shares in a company that loses money and doesn't grow revenue. That is not really what the successful investors we know aim for.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Lotte Chemical Titan Holding Berhad's financial health with this free report on its balance sheet.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Lotte Chemical Titan Holding Berhad's total shareholder return (TSR) and its share price change, which we've covered above. 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. Lotte Chemical Titan Holding Berhad's TSR of was a loss of 70% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

While the broader market gained around 3.8% in the last year, Lotte Chemical Titan Holding Berhad shareholders lost 44%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% 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. 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 Lotte Chemical Titan Holding Berhad (1 is a bit unpleasant!) that you should be aware of before investing here.

We will like Lotte Chemical Titan Holding Berhad better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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