Volatility 101: Should Asian American Medical Group (ASX:AJJ) Shares Have Dropped 46%?
While not a mind-blowing move, it is good to see that the Asian American Medical Group Limited (ASX:AJJ) share price has gained 18% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 46% in the last three years, falling well short of the market return.
See our latest analysis for Asian American Medical Group
Given that Asian American Medical Group didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years Asian American Medical Group saw its revenue shrink by 7.2% per year. That is not a good result. The stock has disappointed holders over the last three years, falling 18%, annualized. And with no profits, and weak revenue, are you surprised? Of course, sentiment could become too negative, and the company may actually be making progress to profitability.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling Asian American Medical Group stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Asian American Medical Group shareholders are down 46% for the year, but the market itself is up 22%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4.1% 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 business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with Asian American Medical Group (including 1 which is can't be ignored) .
We will like Asian American Medical 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 AU exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
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. Thank you for reading.
