U.S. Markets open in 7 hrs 14 mins

Volatility 101: Should Risecomm Group Holdings (HKG:1679) Shares Have Dropped 34%?

Simply Wall St

Risecomm Group Holdings Limited (HKG:1679) shareholders should be happy to see the share price up 25% in the last quarter. But that doesn't change the fact that the returns over the last year have been less than pleasing. After all, the share price is down 34% in the last year, significantly under-performing the market.

See our latest analysis for Risecomm Group Holdings

Given that Risecomm Group Holdings 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. 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.

In the last year Risecomm Group Holdings saw its revenue grow by 10%. That's not a very high growth rate considering it doesn't make profits. Given this lacklustre revenue growth, the share price drop of 34% seems pretty appropriate. In a hot market it's easy to forget growth is the life-blood of a loss making company. So remember, if you buy a profitless company then you risk being a profitless investor.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

SEHK:1679 Income Statement, February 5th 2020

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of Risecomm Group Holdings's earnings, revenue and cash flow.

A Different Perspective

We doubt Risecomm Group Holdings shareholders are happy with the loss of 34% over twelve months. That falls short of the market, which lost 3.8%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. Putting aside the last twelve months, it's good to see the share price has rebounded by 25%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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 2 warning signs we've spotted with Risecomm Group Holdings (including 1 which is is a bit concerning) .

Risecomm Group Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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.

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.