New Times Energy (HKG:166) delivers shareholders respectable 11% CAGR over 3 years, surging 21% in the last week alone

By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at New Times Energy Corporation Limited (HKG:166), which is up 37%, over three years, soundly beating the market decline of 28% (not including dividends).

Since the stock has added HK$149m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for New Times Energy

New Times Energy wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 3 years New Times Energy saw its revenue grow at 47% per year. That's much better than most loss-making companies. The share price rise of 11% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. So now might be the perfect time to put New Times Energy on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at New Times Energy's financial health with this free report on its balance sheet.

A Different Perspective

New Times Energy shareholders are down 22% for the year, but the market itself is up 3.2%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 4%, 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - New Times Energy has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.