We think intelligent long term investing is the way to go. But no-one is immune from buying too high. Zooming in on an example, the UG Healthcare Corporation Limited (Catalist:8K7) share price dropped 58% in the last half decade. That’s not a lot of fun for true believers.

Now let’s have a look at the company’s fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

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Because UG Healthcare made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last five years UG Healthcare saw its revenue shrink by 12% per year. That puts it in an unattractive cohort, to put it mildly. Arguably, the market has responded appropriately to this business performance by sending the share price down 10% (annualized) in the same time period. We don’t generally like to own companies that lose money and don’t grow revenues. You might be better off spending your money on a leisure activity. You’d want to research this company pretty thoroughly before buying, it looks a bit too risky for us.

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 UG Healthcare’s balance sheet strength is a great place to start, if you want to investigate the stock further.

Investors should note that there’s a difference between UG Healthcare’s total shareholder return (TSR) and its share price change, which we’ve covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that UG Healthcare’s TSR, which was a 56% drop over the last 5 years, was not as bad as the share price return.

Investors in UG Healthcare had a tough year, with a total loss of 19%, against a market gain of about 23%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9% over the last half decade. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we’ve spotted with UG Healthcare (including 1 which makes us a bit uncomfortable) .