The nature of investing is that you win some, and you lose some. Unfortunately, shareholders of Royale Home Holdings Limited (HKG:1198) have suffered share price declines over the last year. The share price is down a hefty 66% in that time. Even if you look out three years, the returns are still disappointing, with the share price down44% in that time. Shareholders have had an even rougher run lately, with the share price down 61% in the last 90 days.

With the stock having lost 26% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Given that Royale Home 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Royale Home Holdings' revenue didn't grow at all in the last year. In fact, it fell 13%. That looks pretty grim, at a glance. The share price drop of 66% is understandable given the company doesn't have profits to boast of. 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.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Royale Home Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that Royale Home Holdings shareholders are down 66% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 20%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Royale Home Holdings better, we need to consider many other factors. For instance, we've identified 2 warning signs for Royale Home Holdings (1 makes us a bit uncomfortable) that you should be aware of.

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 Hong Kong exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.