Is South Manganese Investment's (HKG:1091) Share Price Gain Of 274% Well Earned?

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the South Manganese Investment Limited (HKG:1091) share price has soared 274% in the last year. Most would be very happy with that, especially in just one year! And in the last month, the share price has gained 18%. Also impressive, the stock is up 197% over three years, making long term shareholders happy, too.

View our latest analysis for South Manganese Investment

South Manganese Investment 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. Shareholders of unprofitable companies usually expect strong 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.

South Manganese Investment actually shrunk its revenue over the last year, with a reduction of 25%. So we would not have expected the share price to rise 274%. It just goes to show the market doesn't always pay attention to the reported numbers. Of course, it could be that the market expected this revenue drop.

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

This free interactive report on South Manganese Investment's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that South Manganese Investment shareholders have received a total shareholder return of 274% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 22% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 South Manganese Investment that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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

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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. 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.
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