For many, the main point of investing in the stock market is to achieve spectacular returns. When you find (and hold) a big winner, you can markedly improve your finances. In the case of ZO Future Group (HKG:2309), the share price is up an incredible 406% in the last year alone. It's also up 18% in about a month. We note that ZO Future Group reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report. On the other hand, longer term shareholders have had a tougher run, with the stock falling 9.9% in three years.
Since the stock has added HK$302m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
View our latest analysis for ZO Future Group
ZO Future 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. 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 year ZO Future Group saw its revenue grow by 27%. We respect that sort of growth, no doubt. But the market is even more excited about it, with the price apparently bound for the moon, up 406% in one of earth's orbits. We're always cautious when the share price is up so much, but there's certainly enough revenue growth to justify taking a closer look at ZO Future Group.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
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. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
We're pleased to report that ZO Future Group shareholders have received a total shareholder return of 406% over one year. That certainly beats the loss of about 6% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. To that end, you should learn about the 2 warning signs we've spotted with ZO Future Group (including 1 which makes us a bit uncomfortable) .
ZO Future Group is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been 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.
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.