Chiho Environmental Group Limited (HKG:976) shareholders should be happy to see the share price up 14% in the last quarter. Meanwhile over the last three years the stock has dropped hard. Tragically, the share price declined 57% in that time. So it is really good to see an improvement. After all, could be that the fall was overdone.
With the stock having lost 11% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
View our latest analysis for Chiho Environmental Group
Chiho Environmental 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last three years Chiho Environmental Group saw its revenue shrink by 10.0% per year. That is not a good result. The share price decline of 16% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Having said that, if growth is coming in the future, now may be the low ebb for the company. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a 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).
Take a more thorough look at Chiho Environmental Group's financial health with this free report on its balance sheet.
A Different Perspective
It's good to see that Chiho Environmental Group has rewarded shareholders with a total shareholder return of 32% in the last twelve months. That's better than the annualised return of 5% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Case in point: We've spotted 1 warning sign for Chiho Environmental Group you should be aware of.
We will like Chiho Environmental Group better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider 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.
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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.