While it may not be enough for some shareholders, we think it is good to see the Chiho Environmental Group Limited (HKG:976) share price up 14% in a single quarter. But that doesn't change the fact that the returns over the last five years have been less than pleasing. After all, the share price is down 42% in that time, significantly under-performing the market.
Since Chiho Environmental Group has shed HK$241m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
View our latest analysis for Chiho Environmental Group
Because Chiho Environmental Group 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last half decade, Chiho Environmental Group saw its revenue increase by 2.0% per year. That's not a very high growth rate considering it doesn't make profits. Given the weak growth, the share price fall of 7% isn't particularly surprising. The key question is whether the company can make it to profitability, and beyond, without trouble. It could be worth putting it on your watchlist and revisiting when it makes its maiden profit.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Chiho Environmental Group shareholders gained a total return of 7.2% during the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 7% per year, over five years. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Chiho Environmental Group better, we need to consider many other factors. For instance, we've identified 1 warning sign for Chiho Environmental Group that you should be aware of.
But note: Chiho Environmental Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.