Giga Solar Materials' (GTSM:3691) Shareholders Are Down 69% On Their Shares

Generally speaking long term investing is the way to go. But that doesn't mean long term investors can avoid big losses. For example, after five long years the Giga Solar Materials Corp. (GTSM:3691) share price is a whole 69% lower. That's an unpleasant experience for long term holders. Shareholders have had an even rougher run lately, with the share price down 12% in the last 90 days.

View our latest analysis for Giga Solar Materials

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During five years of share price growth, Giga Solar Materials moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.

The modest 1.1% dividend yield is unlikely to be guiding the market view of the stock. It could be that the revenue decline of 19% per year is viewed as evidence that Giga Solar Materials is shrinking. That could explain the weak share price.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We know that Giga Solar Materials 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 Giga Solar Materials

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Giga Solar Materials, it has a TSR of -65% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

We're pleased to report that Giga Solar Materials shareholders have received a total shareholder return of 55% over one year. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 10% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Giga Solar Materials (at least 2 which are significant) , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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