Strong week for Imperium Technology Group (HKG:776) shareholders doesn't alleviate pain of three-year loss

It's nice to see the Imperium Technology Group Limited (HKG:776) share price up 26% in a week. But that doesn't change the fact that the returns over the last three years have been stomach churning. Indeed, the share price is down a whopping 82% in the last three years. So we're relieved for long term holders to see a bit of uplift. The thing to think about is whether the business has really turned around. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

While the stock has risen 26% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Imperium Technology Group

Imperium Technology Group 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 hope 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.

In the last three years Imperium Technology Group saw its revenue shrink by 25% per year. That means its revenue trend is very weak compared to other loss making companies. The swift share price decline at an annual compound rate of 22%, reflects this weak fundamental performance. Never forget that loss making companies with falling revenue can and do cause losses for everyday investors. It's worth remembering that investors call buying a steeply falling share price 'catching a falling knife' because it is a dangerous pass time.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling Imperium Technology Group stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Imperium Technology Group shareholders are down 59% for the year, but the market itself is up 8.3%. 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. Longer term investors wouldn't be so upset, since they would have made 5%, each year, over five years. 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. For example, we've discovered 5 warning signs for Imperium Technology Group (4 are a bit unpleasant!) that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.

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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.