Stock Analysis

Swelling losses haven't held back gains for Beijing Jingcheng Machinery Electric (HKG:187) shareholders since they're up 99% over 3 years

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SEHK:187

It's been a soft week for Beijing Jingcheng Machinery Electric Company Limited (HKG:187) shares, which are down 11%. But that shouldn't obscure the pleasing returns achieved by shareholders over the last three years. In fact, the company's share price bested the return of its market index in that time, posting a gain of 99%.

In light of the stock dropping 11% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.

Check out our latest analysis for Beijing Jingcheng Machinery Electric

Given that Beijing Jingcheng Machinery Electric 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 3 years Beijing Jingcheng Machinery Electric saw its revenue grow at 9.0% per year. That's pretty nice growth. The share price gain of 26% per year shows that the market is paying attention to this growth. Of course, valuation is quite sensitive to the rate of growth. Keep in mind that the strength of the balance sheet impacts the options open to the company.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

SEHK:187 Earnings and Revenue Growth December 11th 2023

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Beijing Jingcheng Machinery Electric's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 11% in the twelve months, Beijing Jingcheng Machinery Electric shareholders did even worse, losing 21%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 14% per year over half a decade. 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. You could get a better understanding of Beijing Jingcheng Machinery Electric's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

We will like Beijing Jingcheng Machinery Electric 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 Hong Kong exchanges.

Valuation is complex, but we're here to simplify it.

Discover if Beijing Jingcheng Machinery Electric might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.