Would Shareholders Who Purchased China Automobile New Retail (Holdings)'s (HKG:526) Stock Three Years Be Happy With The Share price Today?

China Automobile New Retail (Holdings) Limited (HKG:526) has rebounded strongly over the last week, with the share price soaring 113%. But only the myopic could ignore the astounding decline over three years. In that time the share price has melted like a snowball in the desert, down 88%. So we're relieved for long term holders to see a bit of uplift. Of course the real question is whether the business can sustain a turnaround.

We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

Check out our latest analysis for China Automobile New Retail (Holdings)

China Automobile New Retail (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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, China Automobile New Retail (Holdings)'s revenue dropped 35% per year. That's definitely a weaker result than most pre-profit companies report. The swift share price decline at an annual compound rate of 23%, reflects this weak fundamental performance. We prefer leave it to clowns to try to catch falling knives, like this stock. There is a good reason that investors often describe buying a sharply falling stock price as 'trying to catch a falling knife'. Think about it.

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

This free interactive report on China Automobile New Retail (Holdings)'s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 8.0% in the last year, China Automobile New Retail (Holdings) shareholders lost 82%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand China Automobile New Retail (Holdings) better, we need to consider many other factors. For instance, we've identified 2 warning signs for China Automobile New Retail (Holdings) (1 shouldn't be ignored) that you should be aware of.

Of course China Automobile New Retail (Holdings) may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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