Stock Analysis

HUTCHMED (China) (LON:HCM investor five-year losses grow to 49% as the stock sheds UK£211m this past week

Source: Shutterstock

Ideally, your overall portfolio should beat the market average. But even the best stock picker will only win with some selections. So we wouldn't blame long term HUTCHMED (China) Limited (LON:HCM) shareholders for doubting their decision to hold, with the stock down 49% over a half decade. We also note that the stock has performed poorly over the last year, with the share price down 26%. More recently, the share price has dropped a further 18% in a month.

After losing 10% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for HUTCHMED (China)

Given that HUTCHMED (China) 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 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 half decade, HUTCHMED (China) saw its revenue increase by 15% per year. That's well above most other pre-profit companies. The share price drop of 8% per year over five years would be considered let down. You could say that the market has been harsh, given the top line growth. So now is probably an apt time to look closer at the stock, if you think it has potential.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

AIM:HCM Earnings and Revenue Growth March 29th 2023

HUTCHMED (China) is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for HUTCHMED (China) in this interactive graph of future profit estimates.

A Different Perspective

While the broader market lost about 2.9% in the twelve months, HUTCHMED (China) shareholders did even worse, losing 26%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand HUTCHMED (China) better, we need to consider many other factors. Take risks, for example - HUTCHMED (China) has 3 warning signs we think you should be aware of.

But note: HUTCHMED (China) 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 British exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether HUTCHMED (China) is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis