Mei Ah Entertainment Group Limited (HKG:391) shareholders might be rather concerned because the share price has dropped 35% in the last month. On the other hand, over the last twelve months the stock has delivered rather impressive returns. We're very pleased to report the share price shot up 102% in that time. So we think most shareholders won't be too upset about the recent fall. The real question is whether the business is trending in the right direction.
Since the long term performance has been good but there's been a recent pullback of 27%, let's check if the fundamentals match the share price.
See our latest analysis for Mei Ah Entertainment Group
Mei Ah Entertainment Group isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Mei Ah Entertainment Group actually shrunk its revenue over the last year, with a reduction of 33%. So we would not have expected the share price to rise 102%. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. Of course, it could be that the market expected this revenue drop.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Mei Ah Entertainment Group's earnings, revenue and cash flow.
A Different Perspective
We're pleased to report that Mei Ah Entertainment Group shareholders have received a total shareholder return of 102% over one year. Notably the five-year annualised TSR loss of 6% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Mei Ah Entertainment Group you should know about.
Mei Ah Entertainment Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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.