MTN Zakhele Futhi (RF) (JSE:MTNZF investor three-year losses grow to 76% as the stock sheds R141m this past week

As an investor, mistakes are inevitable. But you want to avoid the really big losses like the plague. So take a moment to sympathize with the long term shareholders of MTN Zakhele Futhi (RF) Limited (JSE:MTNZF), who have seen the share price tank a massive 76% over a three year period. That would be a disturbing experience. The more recent news is of little comfort, with the share price down 51% in a year. Even worse, it's down 17% in about a month, which isn't fun at all.

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

See our latest analysis for MTN Zakhele Futhi (RF)

MTN Zakhele Futhi (RF) isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over three years, MTN Zakhele Futhi (RF) grew revenue at 53% per year. That's well above most other pre-profit companies. So on the face of it we're really surprised to see the share price down 21% a year in the same time period. The share price makes us wonder if there is an issue with profitability. Ultimately, revenue growth doesn't amount to much if the business can't scale well. If the company is low on cash, it may have to raise capital soon.

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

This free interactive report on MTN Zakhele Futhi (RF)'s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

MTN Zakhele Futhi (RF) shareholders are down 51% for the year, but the market itself is up 21%. 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 10% 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. Take risks, for example - MTN Zakhele Futhi (RF) has 3 warning signs (and 1 which is concerning) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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