It’s nice to see the China Fortune Financial Group Limited (HKG:290) share price up 15% in a week. But that doesn’t change the reality of under-performance over the last twelve months. In fact, the price has declined 47% in a year, falling short of the returns you could get by investing in an index fund.
China Fortune Financial Group isn’t a profitable company, so 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
China Fortune Financial Group’s revenue didn’t grow at all in the last year. In fact, it fell 42%. That looks pretty grim, at a glance. The stock price has languished lately, falling 47% in a year. What would you expect when revenue is falling, and it doesn’t make a profit? It’s hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. It might be well worthwhile taking a look at our free report on China Fortune Financial Group’s earnings, revenue and cash flow.
A Different Perspective
We regret to report that China Fortune Financial Group shareholders are down 47% for the year. Unfortunately, that’s worse than the broader market decline of 4.2%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 1.4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of China Fortune Financial Group by clicking this link.
China Fortune Financial Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.