Eco World International Berhad (KLSE:EWINT) investors are sitting on a loss of 73% if they invested five years ago

Long-term investing is the way to go, but that doesn’t mean you have to hold every stock forever. We do not wish catastrophic capital losses on anyone. For example, we sympathize with anyone who has been caught Eco World International Berhad (KLSE:EWINT) during the five years in which its share price fell 75%. And it’s not just long-term owners who are hurting, as the stock is down 46% in the past year. The declines have accelerated recently, with a 21% drop in the past three months.

Since shareholders have been down for the long haul, let’s look at the underlying fundamentals over that time and see if they’ve been consistent with returns.

Check out our latest analysis of Eco World International Berhad

Eco World International Berhad is not currently profitable, so most analysts will look to revenue growth to get an idea of ​​how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong earnings growth. This is because rapid revenue growth can easily be extrapolated to forecast profits, often of considerable size.

In the last half of the decade, Eco World International Berhad saw its revenue increase by 55% annually. This is far above most other for-profit companies. So, on the face of it, we’re really surprised to see that the share price has averaged a 12% drop every year, over the same time period. The stock may have been overhyped earlier. We recommend that you carefully check for signs of future growth and balance sheet threats before considering a purchase.

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The company’s revenue and earnings (over time) are shown in the image below (click to see exact figures).

earnings and revenue growth

earnings and revenue growth

this free Eco World International Berhad’s interactive balance sheet strength report is a good place to start if you want to investigate the stock further.

What about dividends?

It is important to consider total shareholder return, as well as share price return, for any given stock. The TSR is a yield calculation that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of any discounted capital gains and spin-offs. Therefore, for companies that pay a generous dividend, the TSR is often much higher than the stock price performance. On the other hand, Eco World International Berhad’s TSR over the past 5 years was -73%, which outperforms the above-mentioned share price return. Thus, the dividends paid by the company have boosted total shareholder return.

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A Different Perspective

While the broader market lost around 7.0% in the twelve months, Eco World International Berhad shareholders fared even worse, losing 46% (even including dividends). However, it may simply be that the share price has been affected by broader market restlessness. It might be worth keeping an eye on the fundamentals, just in case there’s a good opportunity. Sadly, last year’s performance ends on a bad streak, with shareholders facing a total loss of 12% per year over five years. We realize that Baron Rothschild has said that investors should “buy when there’s blood in the streets,” but we caution that investors should first make sure they’re buying a high-quality business. While it’s worth considering the various impacts that market conditions can have on a stock’s price, there are other factors that are even more important. For this, you should be aware of the 2 warning signs we have seen with Eco World International Berhad.

If you’d rather check with another company, one with a potentially superior financial standing, don’t miss out free list of companies that have proven that they can increase their earnings.

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Please note that the market returns discussed in this article reflect the market-weighted average returns for stocks currently trading on my exchanges.

Do you have comments on this article? Worried about content? Get in touch directly with us. Alternatively, email the editorial team at (at) simplywallst.com.

This Simply Wall St article 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 shares, and does not take into account your goals or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stock mentioned.

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