While it may not be enough for some shareholders, we think it is good to see the Fosun Tourism Group (HKG:1992) share price up 13% in a single quarter. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 28% in the last three years, falling well short of the market return.
While the stock has risen 4.8% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.
Fosun Tourism Group isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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, Fosun Tourism Group's revenue dropped 38% per year. That means its revenue trend is very weak compared to other loss making companies. On the face of it we'd posit the share price fall of 9% compound, over three years is well justified by the fundamental deterioration. It would probably be worth asking whether the company can fund itself to profitability. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Fosun Tourism Group's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We can sympathize with Fosun Tourism Group about their 5.0% loss for the year, but the silver lining is that the broader market return was worse, at around -22%. Furthermore, the stock lost shareholders 8% per year over three years, so the one-year return was better in a relative sense. It is of course not much comfort to know that the losses have slowed. Shareholders will be hoping for a proper turnaround, no doubt. 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 instance, we've identified 1 warning sign for Fosun Tourism Group that you should be aware of.
But note: Fosun Tourism Group 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.