Many investors define successful investing as beating the market average over the long term. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term MRC Global Inc. (NYSE:MRC) shareholders have had that experience, with the share price dropping 41% in three years, versus a market return of about 26%. Shareholders have had an even rougher run lately, with the share price down 21% in the last 90 days. Of course, this share price action may well have been influenced by the 19% decline in the broader market, throughout the period.

Since MRC Global has shed US$124m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for MRC Global

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

MRC Global has made a profit in the past. However, it made a loss in the last twelve months, suggesting profit may be an unreliable metric at this stage. Other metrics may better explain the share price move.

We think that the revenue decline over three years, at a rate of 19% per year, probably had some shareholders looking to sell. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.

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 MRC Global's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Although it hurts that MRC Global returned a loss of 3.2% in the last twelve months, the broader market was actually worse, returning a loss of 20%. Of far more concern is the 7% p.a. loss served to shareholders over the last five years. This sort of share price action isn't particularly encouraging, but at least the losses are slowing. It's always interesting to track share price performance over the longer term. But to understand MRC Global better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for MRC Global you should be aware of.

We will like MRC Global better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.