Did Sun International Group’s (HKG:8029) Share Price Deserve to Gain 86%?

Sun International Group Limited (HKG:8029) shareholders have seen the share price descend 20% over the month. But that doesn’t change the fact that the returns over the last five years have been pleasing. After all, the share price is up a market-beating 86% in that time.

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Check out our latest analysis for Sun International Group

Because Sun International Group is loss-making, 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. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last half decade Sun International Group’s revenue has actually been trending down at about 8.3% per year. Despite the lack of revenue growth, the stock has returned a respectable 13%, compound, over that time. To us that suggests that there probably isn’t a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.

The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).

SEHK:8029 Income Statement, May 22nd 2019
SEHK:8029 Income Statement, May 22nd 2019

This free interactive report on Sun International Group’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 14% in the twelve months, Sun International Group shareholders did even worse, losing 60%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Longer term investors wouldn’t be so upset, since they would have made 13%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

But note: Sun International 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 HK exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.