This week we saw the CEC International Holdings Limited (HKG:759) share price climb by 15%. But that doesn’t change the fact that the returns over the last half decade have been stomach churning. Like a ship taking on water, the share price has sunk 77% in that time. So we don’t gain too much confidence from the recent recovery. The real question is whether the business can leave its past behind and improve itself over the years ahead.
Check out our latest analysis for CEC International Holdings
Given that CEC International 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last five years CEC International Holdings saw its revenue shrink by 6.1% per year. That’s not what investors generally want to see. The share price fall of 25% (per year, over five years) is a stern reminder that money-losing companies are expected to grow revenue. It takes a certain kind of mental fortitude (or recklessness) to buy shares in a company that loses money and doesn’t grow revenue. That is not really what the successful investors we know aim for.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
SEHK:759 Income Statement April 1st 2020
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
While it’s never nice to take a loss, CEC International Holdings shareholders can take comfort that their trailing twelve month loss of 8.6% wasn’t as bad as the market loss of around 18%. Of far more concern is the 25% p.a. loss served to shareholders over the last five years. This sort of share price action isn’t particularly encouraging, but at least the losses are slowing. It’s always interesting to track share price performance over the longer term. But to understand CEC International Holdings better, we need to consider many other factors. Even so, be aware that CEC International Holdings is showing 4 warning signs in our investment analysis , and 1 of those is a bit unpleasant…
Of course CEC International Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
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