Harmonicare Medical Holdings Limited (HKG:1509) shareholders should be happy to see the share price up 10% in the last month. But that doesn’t change the fact that the returns over the last three years have been disappointing. Tragically, the share price declined 63% in that time. So it’s is really good to see an improvement. The rise has some hopeful, but turnarounds are often precarious.
Because Harmonicare Medical Holdings 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.
In the last three years, Harmonicare Medical Holdings saw its revenue grow by 1.6% per year, compound. Given it’s losing money in pursuit of growth, we are not really impressed with that. It’s likely this weak growth has contributed to an annualised return of 28% for the last three years. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. After all, growing a business isn’t easy, and the process will not always be smooth.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free report showing analyst forecasts should help you form a view on Harmonicare Medical Holdings
A Different Perspective
The last twelve months weren’t great for Harmonicare Medical Holdings shares, which performed worse than the market, costing holders 22%. Meanwhile, the broader market slid about 8.6%, likely weighing on the stock. However, the loss over the last year isn’t as bad as the 27% per annum loss investors have suffered over the last three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. You could get a better understanding of Harmonicare Medical Holdings’s growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.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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