WAC Holdings'(HKG:8619) Share Price Is Down 83% Over The Past Year.

WAC Holdings Limited (HKG:8619) shareholders should be happy to see the share price up 25% in the last month. But that hardly compensates for the shocking decline over the last twelve months. To wit, the stock has dropped 83% over the last year. It's not uncommon to see a bounce after a drop like that. Only time will tell if the company can sustain the turnaround.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

See our latest analysis for WAC Holdings

While WAC Holdings made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

WAC Holdings grew its revenue by 13% over the last year. While that may seem decent it isn't great considering the company is still making a loss. Nonetheless, it's fair to say the 83% share price implosion is unexpected.. Clearly the market was expecting better, and this may blow out projections of profitability. But if it will make money, albeit later than previously believed, this could be an opportunity.

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of WAC Holdings' earnings, revenue and cash flow.

A Different Perspective

Given that the market gained 24% in the last year, WAC Holdings shareholders might be miffed that they lost 83%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 40%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that WAC Holdings is showing 4 warning signs in our investment analysis , and 1 of those is potentially serious...

WAC Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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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. 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.
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