We think intelligent long term investing is the way to go. But along the way some stocks are going to perform badly. For example, after five long years the Kandi Technologies Group, Inc. (NASDAQ:KNDI) share price is a whole 57% lower. That is extremely sub-optimal, to say the least. It's up 3.1% in the last seven days.
Because Kandi Technologies Group is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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 half a decade Kandi Technologies Group reduced its trailing twelve month revenue by 14% for each year. That's definitely a weaker result than most pre-profit companies report. Arguably, the market has responded appropriately to this business performance by sending the share price down 15% (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 image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of Kandi Technologies Group's earnings, revenue and cash flow.
A Different Perspective
Kandi Technologies Group's TSR for the year was broadly in line with the market average, at 21%. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 15%, which was endured over half a decade. We're pretty skeptical of turnaround stories, but it's good to see the recent share price recovery. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.
There are plenty of other companies that have insiders buying up shares. You probably do 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 US exchanges.
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.
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