Long term investing is the way to go, but that doesn’t mean you should hold every stock forever. We don’t wish catastrophic capital loss on anyone. Spare a thought for those who held Genetic Signatures Limited (ASX:GSS) for five whole years – as the share price tanked 85%. And we doubt long term believers are the only worried holders, since the stock price has declined 49% over the last twelve months. On the other hand the share price has bounced 8.2% over the last week. 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.

So let’s have a look and see if the longer term performance of the company has been in line with the underlying business’ progress.

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Genetic Signatures 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. Shareholders of unprofitable companies usually desire strong revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over half a decade Genetic Signatures reduced its trailing twelve month revenue by 2.3% for each year. While far from catastrophic that is not good. The share price fall of 13% (per year, over five years) is a stern reminder that money-losing companies are expected to grow revenue. It takes a certain kind of mental fortitude (or recklessness) to buy shares in a company that loses money and doesn’t grow revenue. Fear of becoming a ‘bagholder’ may be keeping people away from this stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

If you are thinking of buying or selling Genetic Signatures stock, you should check out this FREE detailed report on its balance sheet.

While the broader market gained around 13% in the last year, Genetic Signatures shareholders lost 49%. 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. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 13% 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. 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. To that end, you should be aware of the 3 warning signs we’ve spotted with Genetic Signatures .