No-one enjoys it when they lose money on a stock. But it can difficult to make money in a declining market. While the Oriental Energy Co., Ltd. (SZSE:002221) share price is down 25% in the last three years, the total return to shareholders (which includes dividends) was -22%. That's better than the market which declined 25% over the last three years.
After losing 5.6% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
We don't think that Oriental Energy's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last three years Oriental Energy saw its revenue shrink by 1.0% per year. That is not a good result. The yearly loss of 8% over three years isn't too bad in the scheme of things. The broader market sell-off would have weighed on the stock. We'd need to get more comfortable that the company will trend towards profitability, before getting considering a purchase.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So it makes a lot of sense to check out what analysts think Oriental Energy will earn in the future (free profit forecasts).
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Oriental Energy's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for Oriental Energy shareholders, and that cash payout explains why its total shareholder loss of 22%, over the last 3 years, isn't as bad as the share price return.
A Different Perspective
It's good to see that Oriental Energy has rewarded shareholders with a total shareholder return of 9.1% in the last twelve months. That's better than the annualised return of 4% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Oriental Energy (of which 1 shouldn't be ignored!) you should know about.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese 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.