HUTCHMED (China) (LON:HCM investor five-year losses grow to 53% as the stock sheds UK£125m this past week
We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example, after five long years the HUTCHMED (China) Limited (LON:HCM) share price is a whole 53% lower. That's an unpleasant experience for long term holders. Shareholders have had an even rougher run lately, with the share price down 35% in the last 90 days.
Since HUTCHMED (China) has shed UK£125m 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 HUTCHMED (China)
HUTCHMED (China) 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
Over five years, HUTCHMED (China) grew its revenue at 15% per year. That's well above most other pre-profit companies. Unfortunately for shareholders the share price has dropped 9% per year - disappointing considering the growth. This could mean high expectations have been tempered, potentially because investors are looking to the bottom line. Given the revenue growth we'd consider the stock to be quite an interesting prospect if the company has a clear path to profitability.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
HUTCHMED (China) is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think HUTCHMED (China) will earn in the future (free analyst consensus estimates)
A Different Perspective
It's nice to see that HUTCHMED (China) shareholders have received a total shareholder return of 23% over the last year. Notably the five-year annualised TSR loss of 9% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand HUTCHMED (China) better, we need to consider many other factors. Even so, be aware that HUTCHMED (China) is showing 3 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges.
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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.
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