Kingdee International Software Group (HKG:268) ascends 7.5% this week, taking one-year gains to 215%

Explore Kingdee International Software Group's Fair Values from the Community and select yours

Unless you borrow money to invest, the potential losses are limited. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Kingdee International Software Group Company Limited (HKG:268) share price has soared 215% in the last 1 year. Most would be very happy with that, especially in just one year! It's also good to see the share price up 38% over the last quarter. But this move may well have been assisted by the reasonably buoyant market (up 15% in 90 days). The longer term returns have not been as good, with the stock price only 9.4% higher than it was three years ago.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

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Kingdee International Software Group 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

In the last year Kingdee International Software Group saw its revenue grow by 10%. That's not a very high growth rate considering it doesn't make profits. So we wouldn't have expected the share price to rise by 215%. The business will need a lot more growth to justify that increase. We're not so sure that revenue growth is driving the market optimism about the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Kingdee International Software Group is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.

A Different Perspective

It's nice to see that Kingdee International Software Group shareholders have received a total shareholder return of 215% over the last year. That certainly beats the loss of about 2% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. If you would like to research Kingdee International Software Group in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.