We're definitely into long term investing, but some companies are simply bad investments over any time frame. We really hate to see fellow investors lose their hard-earned money. Spare a thought for those who held VPower Group International Holdings Limited (HKG:1608) for five whole years - as the share price tanked 89%. And some of the more recent buyers are probably worried, too, with the stock falling 33% in the last year. On top of that, the share price is down 27% in the last week. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Since VPower Group International Holdings has shed HK$834m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for VPower Group International Holdings
VPower Group International Holdings wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.
Over five years, VPower Group International Holdings grew its revenue at 11% per year. That's a fairly respectable growth rate. So the stock price fall of 14% per year seems pretty steep. The market can be a harsh master when your company is losing money and revenue growth disappoints.
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 VPower Group International Holdings stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While the broader market lost about 19% in the twelve months, VPower Group International Holdings shareholders did even worse, losing 33%. 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, longer term shareholders are suffering worse, given the loss of 14% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. 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. For example, we've discovered 4 warning signs for VPower Group International Holdings that you should be aware of before investing here.
Of course VPower Group International Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.