The three-year earnings decline is not helping RiTdisplay's (TWSE:8104 share price, as stock falls another 11% in past week

Many investors define successful investing as beating the market average over the long term. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term RiTdisplay Corporation (TWSE:8104) shareholders, since the share price is down 51% in the last three years, falling well short of the market return of around 37%. Even worse, it's down 23% in about a month, which isn't fun at all.

If the past week is anything to go by, investor sentiment for RiTdisplay isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for RiTdisplay

We don't think that RiTdisplay's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Over three years, RiTdisplay grew revenue at 6.3% per year. That's not a very high growth rate considering it doesn't make profits. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 15% during the period. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). Keep in mind it isn't unusual for good businesses to have a tough time or a couple of uninspiring years.

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

We know that RiTdisplay has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for RiTdisplay in this interactive graph of future profit estimates.

What About The Total Shareholder Return (TSR)?

We've already covered RiTdisplay's 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. RiTdisplay's TSR of was a loss of 45% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

RiTdisplay shareholders are up 25% for the year. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 0.9% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand RiTdisplay better, we need to consider many other factors. For example, we've discovered 4 warning signs for RiTdisplay (2 are potentially serious!) that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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