Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the i.century Holding Limited (HKG:8507) share price is down 17% in the last year. That contrasts poorly with the market return of 4.9%. Because i.century Holding hasn’t been listed for many years, the market is still learning about how the business performs. The share price has dropped 19% in three months.
Given that i.century Holding 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. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In just one year i.century Holding saw its revenue fall by 4.0%. That’s not what investors generally want to see. Shareholders have seen the share price drop 17% in that time. What would you expect when revenue is falling, and it doesn’t make a profit? It’s hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
The company’s revenue and earnings (over time) are depicted in the image below.
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
While i.century Holding shareholders are down 17% for the year, the market itself is up 4.9%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. Notably, the loss over the last year isn’t as bad as the 19% drop in the last three months. This probably signals that the business has recently disappointed shareholders – it will take time to win them back. If you would like to research i.century Holding in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
We will like i.century Holding better if we see some big insider buys. While we wait, check out this free list of growing companies 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 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 firstname.lastname@example.org. 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.