We think intelligent long term investing is the way to go. But that doesn't mean long term investors can avoid big losses. For example the Chongqing Hifuture Information Technology Co., Ltd. (SZSE:002168) share price dropped 68% over five years. We certainly feel for shareholders who bought near the top. And some of the more recent buyers are probably worried, too, with the stock falling 21% in the last year. The falls have accelerated recently, with the share price down 19% in the last three months.
With the stock having lost 12% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Because Chongqing Hifuture Information Technology made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.
Over half a decade Chongqing Hifuture Information Technology reduced its trailing twelve month revenue by 43% for each year. That puts it in an unattractive cohort, to put it mildly. It seems appropriate, then, that the share price slid about 11% annually during that time. We don't generally like to own companies that lose money and don't grow revenues. You might be better off spending your money on a leisure activity. This looks like a really risky stock to buy, at a glance.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Chongqing Hifuture Information Technology's 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 Chongqing Hifuture Information Technology shareholders are down 21% for the year. Unfortunately, that's worse than the broader market decline of 17%. 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, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. 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. 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. To that end, you should be aware of the 2 warning signs we've spotted with Chongqing Hifuture Information Technology .
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.
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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.