Long term investing works well, but it doesn’t always work for each individual stock. We don’t wish catastrophic capital loss on anyone. Spare a thought for those who held Sherritt International Corporation (TSE:S) for five whole years – as the share price tanked 95%. And it’s not just long term holders hurting, because the stock is down 74% in the last year. The falls have accelerated recently, with the share price down 39% in the last three months. Of course, this share price action may well have been influenced by the 27% decline in the broader market, throughout the period.

We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.

View our latest analysis for Sherritt International

Sherritt International 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. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last five years Sherritt International saw its revenue shrink by 22% per year. That puts it in an unattractive cohort, to put it mildly. So it’s not altogether surprising to see the share price down 46% per year in the same time period. We don’t think this is a particularly promising picture. Ironically, that behavior could create an opportunity for the contrarian investor – but only if there are good reasons to predict a brighter future.

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

This free interactive report on Sherritt International’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 25% in the twelve months, Sherritt International shareholders did even worse, losing 74%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 45% over the last half decade. 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. It’s always interesting to track share price performance over the longer term. But to understand Sherritt International better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we’ve spotted 3 warning signs for Sherritt International you should know about.

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 CA exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.



We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.