The Baofeng Modern International Holdings (HKG:1121) Share Price Has Gained 39% And Shareholders Are Hoping For More

Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Baofeng Modern International Holdings Company Limited (HKG:1121) share price is up 39% in the last year, clearly besting the market return of around 2.0% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! However, the longer term returns haven't been so impressive, with the stock up just 15% in the last three years.

See our latest analysis for Baofeng Modern International Holdings

Because Baofeng Modern International Holdings made a loss in the last twelve months, 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Baofeng Modern International Holdings actually shrunk its revenue over the last year, with a reduction of 28%. Despite the lack of revenue growth, the stock has returned a solid 39% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.

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

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. It might be well worthwhile taking a look at our free report on Baofeng Modern International Holdings' earnings, revenue and cash flow.

A Different Perspective

It's good to see that Baofeng Modern International Holdings has rewarded shareholders with a total shareholder return of 39% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 4% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. Even so, be aware that Baofeng Modern International Holdings is showing 3 warning signs in our investment analysis , and 2 of those are significant...

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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