PacRay International Holdings Limited (HKG:1010) shareholders will doubtless be very grateful to see the share price up 35% in the last week. But that doesn’t change the fact that the returns over the last year have been disappointing. During that time the share price has sank like a stone, descending 61%. It’s not that amazing to see a bounce after a drop like that. Of course, it could be that the fall was overdone.
Check out our latest analysis for PacRay International Holdings
Given that PacRay 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
PacRay International Holdings’s revenue didn’t grow at all in the last year. In fact, it fell 26%. That’s not what investors generally want to see. In the absence of profits, it’s not unreasonable that the share price fell 61%. Fingers crossed this is the low ebb for the stock. We don’t generally like to own companies with falling revenues and no profits, so we’re pretty cautious of this one, at the moment.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling PacRay International Holdings stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We regret to report that PacRay International Holdings shareholders are down 61% for the year. Unfortunately, that’s worse than the broader market decline of 5.3%. 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. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 8.2% per year over five years. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We’ve spotted 5 warning signs for PacRay International Holdings you should be aware of, and 2 of them are significant.
We will like PacRay International Holdings 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 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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