Some stocks are best avoided. It hits us in the gut when we see fellow investors suffer a loss. Anyone who held Power Financial Group Limited (HKG:397) for five years would be nursing their metaphorical wounds since the share price dropped 96% in that time. And it's not just long term holders hurting, because the stock is down 42% in the last year. Unhappily, the share price slid 5.8% in the last week.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Power Financial Group isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over half a decade Power Financial Group reduced its trailing twelve month revenue by 19% for each year. That puts it in an unattractive cohort, to put it mildly. So it's not altogether surprising to see the share price down 47% per year in the same time period. We don't think this is a particularly promising picture. Of course, the poor performance could mean the market has been too severe selling down. That can happen.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
While the broader market gained around 1.4% in the last year, Power Financial Group shareholders lost 42%. 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, longer term shareholders are suffering worse, given the loss of 47% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
We will like Power Financial Group 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 HK exchanges.
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