It is doubtless a positive to see that the Solomon Systech (International) Limited (HKG:2878) share price has gained some 147% in the last three months. But if you look at the last five years the returns have not been good. After all, the share price is down 42% in that time, significantly under-performing the market.
Solomon Systech (International) 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over five years, Solomon Systech (International) grew its revenue at 12% per year. That's a fairly respectable growth rate. Shareholders have seen the share price fall at 10% per year, for five years: a poor performance. Those who bought back then clearly believed in stronger growth - and maybe even profits. The lesson is that if you buy shares in a money losing company you could end up losing money.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling Solomon Systech (International) stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's good to see that Solomon Systech (International) has rewarded shareholders with a total shareholder return of 10.0% in the last twelve months. That certainly beats the loss of about 10% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Solomon Systech (International) better, we need to consider many other factors. For example, we've discovered 3 warning signs for Solomon Systech (International) (1 doesn't sit too well with us!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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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