Further weakness as Wison Engineering Services (HKG:2236) drops 11% this week, taking five-year losses to 78%

Some stocks are best avoided. It hits us in the gut when we see fellow investors suffer a loss. For example, we sympathize with anyone who was caught holding Wison Engineering Services Co. Ltd. (HKG:2236) during the five years that saw its share price drop a whopping 78%. And we doubt long term believers are the only worried holders, since the stock price has declined 38% over the last twelve months. Shareholders have had an even rougher run lately, with the share price down 34% in the last 90 days.

If the past week is anything to go by, investor sentiment for Wison Engineering Services isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Wison Engineering Services

Given that Wison Engineering Services didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over five years, Wison Engineering Services grew its revenue at 7.9% per year. That's a fairly respectable growth rate. So the stock price fall of 12% per year seems pretty steep. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.

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 Wison Engineering Services stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Wison Engineering Services shareholders are down 38% for the year. Unfortunately, that's worse than the broader market decline of 7.6%. 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 12% 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. 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. Case in point: We've spotted 1 warning sign for Wison Engineering Services you should be aware of.

Of course Wison Engineering Services 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 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.