How Much Did China Fordoo Holdings'(HKG:2399) Shareholders Earn From Share Price Movements Over The Last Three Years?

By
Simply Wall St
Published
June 05, 2021
SEHK:2399
Source: Shutterstock

Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term China Fordoo Holdings Limited (HKG:2399) shareholders. Sadly for them, the share price is down 69% in that time. And more recent buyers are having a tough time too, with a drop of 40% in the last year. It's down 86% in about a quarter.

Check out our latest analysis for China Fordoo Holdings

China Fordoo Holdings 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 expect to see good 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.

Over the last three years, China Fordoo Holdings' revenue dropped 48% per year. That's definitely a weaker result than most pre-profit companies report. Arguably, the market has responded appropriately to this business performance by sending the share price down 19% (annualized) in the same time period. When revenue is dropping, and losses are still costing, and the share price sinking fast, it's fair to ask if something is remiss. After losing money on a declining business with falling stock price, we always consider whether eager bagholders are still offering us a reasonable exit price.

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

earnings-and-revenue-growth
SEHK:2399 Earnings and Revenue Growth June 6th 2021

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 China Fordoo Holdings' earnings, revenue and cash flow.

A Different Perspective

China Fordoo Holdings shareholders are down 40% for the year, but the market itself is up 28%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 2% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for China Fordoo Holdings (of which 2 shouldn't be ignored!) you should know about.

But note: China Fordoo Holdings 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 HK exchanges.

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