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Long term investing works well, but it doesn't always work for each individual stock. It hits us in the gut when we see fellow investors suffer a loss. Imagine if you held Rolta India Limited (NSE:ROLTA) for half a decade as the share price tanked 96%. And some of the more recent buyers are probably worried, too, with the stock falling 62% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 18% in thirty days.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
See our latest analysis for Rolta India
Rolta India isn't a profitable company, so 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last five years Rolta India saw its revenue shrink by 11% per year. That puts it in an unattractive cohort, to put it mildly. So it's not that strange that the share price dropped 47% per year in that 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.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Rolta India's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Rolta India shareholders are down 62% for the year, but the market itself is up 0.2%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 46% 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. If you would like to research Rolta India in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
We will like Rolta India better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.