The nature of investing is that you win some, and you lose some. And there's no doubt that Greenheart Group Limited (HKG:94) stock has had a really bad year. In that relatively short period, the share price has plunged 66%. We note that it has not been easy for shareholders over three years, either; the share price is down 49% in that time. Furthermore, it's down 60% in about a quarter. That's not much fun for holders.
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Greenheart Group isn't a profitable company, so 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 expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Greenheart Group's revenue didn't grow at all in the last year. In fact, it fell 30%. That looks pretty grim, at a glance. In the absence of profits, it's not unreasonable that the share price fell 66%. Fingers crossed this is the low ebb for the stock. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
Take a more thorough look at Greenheart Group's financial health with this free report on its balance sheet.
A Different Perspective
While the broader market lost about 14% in the twelve months, Greenheart Group shareholders did even worse, losing 66%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7.2% per year over five years. We realise that Buffett 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 businesses. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.