share_log

Shareholders in Guangdong Fenghua Advanced Technology (Holding) (SZSE:000636) Are in the Red If They Invested Three Years Ago

Simply Wall St ·  Nov 21, 2023 01:20

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But long term Guangdong Fenghua Advanced Technology (Holding) Co., Ltd. (SZSE:000636) shareholders have had a particularly rough ride in the last three year. So they might be feeling emotional about the 54% share price collapse, in that time.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for Guangdong Fenghua Advanced Technology (Holding)

Given that Guangdong Fenghua Advanced Technology (Holding) only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last three years Guangdong Fenghua Advanced Technology (Holding) saw its revenue shrink by 6.0% per year. That's not what investors generally want to see. The share price decline of 15% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Of course, it's the future that will determine whether today's price is a good one. We'd be pretty wary of this one until it makes a profit, because we don't specialize in finding turnaround situations.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
SZSE:000636 Earnings and Revenue Growth November 21st 2023

If you are thinking of buying or selling Guangdong Fenghua Advanced Technology (Holding) stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Guangdong Fenghua Advanced Technology (Holding) shareholders are down 4.6% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 3.8%. 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. Longer term investors wouldn't be so upset, since they would have made 7%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Guangdong Fenghua Advanced Technology (Holding) better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Guangdong Fenghua Advanced Technology (Holding) you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
    Write a comment