As every investor would know, not every swing hits the sweet spot. But really big losses can really drag down an overall portfolio. So take a moment to sympathize with the long term shareholders of China Environmental Technology Holdings Limited (HKG:646), who have seen the share price tank a massive 90% over a three year period. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. The more recent news is of little comfort, with the share price down 65% in a year. More recently, the share price has dropped a further 38% in a month.
While a drop like that is definitely a body blow, money isn’t as important as health and happiness.
View our latest analysis for China Environmental Technology Holdings
Given that China Environmental Technology 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 three years China Environmental Technology Holdings saw its revenue shrink by 0.1% per year. That is not a good result. Having said that the 54% annualized share price decline highlights the risk of investing in unprofitable companies. This business clearly needs to grow revenues if it is to perform as investors hope. Don’t let a share price decline ruin your calm. You make better decisions when you’re calm.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
SEHK:646 Income Statement March 27th 2020
If you are thinking of buying or selling China Environmental Technology Holdings stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We regret to report that China Environmental Technology Holdings shareholders are down 65% for the year. Unfortunately, that’s worse than the broader market decline of 17%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 36% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 5 warning signs we’ve spotted with China Environmental Technology Holdings (including 1 which is is concerning) .
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
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.