China Finance Investment Holdings (HKG:875) surges 11% this week, taking three-year gains to 140%

While China Finance Investment Holdings Limited (HKG:875) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 20% in the last quarter. But in three years the returns have been great. The share price marched upwards over that time, and is now 140% higher than it was. To some, the recent share price pullback wouldn't be surprising after such a good run. The thing to consider is whether the underlying business is doing well enough to support the current price.

The past week has proven to be lucrative for China Finance Investment Holdings investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for China Finance Investment Holdings

Given that China Finance Investment Holdings 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years China Finance Investment Holdings has grown its revenue at 63% annually. That's well above most pre-profit companies. Meanwhile, the share price performance has been pretty solid at 34% compound over three years. This suggests the market has recognized the progress the business has made, at least to a significant degree. Nonetheless, we'd say China Finance Investment Holdings is still worth investigating - successful businesses can often keep growing for long periods.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at China Finance Investment Holdings' financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 16% in the twelve months, China Finance Investment Holdings shareholders did even worse, losing 39%. 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. On the bright side, long term shareholders have made money, with a gain of 8% per year over half a decade. 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 instance, we've identified 1 warning sign for China Finance Investment Holdings that you should be aware of.

We will like China Finance Investment Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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.