It might be of some concern to shareholders to see the GOME Retail Holdings Limited (HKG:493) share price down 13% in the last month. But looking back over the last year, the returns have actually been rather pleasing! After all, the share price is up a market-beating 57% in that time.
Given that GOME Retail Holdings didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. 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.
GOME Retail Holdings actually shrunk its revenue over the last year, with a reduction of 7.6%. The stock is up 57% in that time, a fine performance given the revenue drop. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling GOME Retail Holdings stock, you should check out this FREE detailed report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We’ve already covered GOME Retail Holdings’ share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that GOME Retail Holdings’ TSR of 57% over the last year is better than the share price return.
A Different Perspective
We’re pleased to report that GOME Retail Holdings shareholders have received a total shareholder return of 57% over one year. That certainly beats the loss of about 2.2% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It’s always interesting to track share price performance over the longer term. But to understand GOME Retail Holdings better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with GOME Retail Holdings , and understanding them should be part of your investment process.
But note: GOME Retail Holdings 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.
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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. 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.
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