Long term investing works well, but it doesn’t always work for each individual stock. It hits us in the gut when we see fellow investors suffer a loss. For example, we sympathize with anyone who was caught holding Success Dragon International Holdings Limited (HKG:1182) during the five years that saw its share price drop a whopping 81%. And it’s not just long term holders hurting, because the stock is down 27% in the last year. The falls have accelerated recently, with the share price down 16% in the last three months. Of course, this share price action may well have been influenced by the 7.2% decline in the broader market, throughout the period.
We really feel for shareholders in this scenario. It’s a good reminder of the importance of diversification, and it’s worth keeping in mind there’s more to life than money, anyway.
Check out our latest analysis for Success Dragon International Holdings
Given that Success Dragon 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over half a decade Success Dragon International Holdings reduced its trailing twelve month revenue by 14% for each year. That’s definitely a weaker result than most pre-profit companies report. So it’s not that strange that the share price dropped 28% per year in that period. This kind of price performance makes us very wary, especially when combined with falling revenue. Of course, the poor performance could mean the market has been too severe selling down. That can happen.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Success Dragon International Holdings’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
While the broader market lost about 8.7% in the twelve months, Success Dragon International Holdings shareholders did even worse, losing 27%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. However, the loss over the last year isn’t as bad as the 28% per annum loss investors have suffered over the last half decade. We’d need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It’s always interesting to track share price performance over the longer term. But to understand Success Dragon International Holdings better, we need to consider many other factors. Take risks, for example – Success Dragon International Holdings has 4 warning signs (and 1 which doesn’t sit too well with us) we think you should know about.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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 [email protected] 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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