Tan Chong Motor Holdings Berhad's (KLSE:TCHONG) growing losses don't faze investors as the stock jumps 38% this past week

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. For example, the Tan Chong Motor Holdings Berhad (KLSE:TCHONG) share price is up 35% in the last 1 year, clearly besting the market decline of around 2.9% (not including dividends). So that should have shareholders smiling. In contrast, the longer term returns are negative, since the share price is 29% lower than it was three years ago.

The past week has proven to be lucrative for Tan Chong Motor Holdings Berhad investors, so let's see if fundamentals drove the company's one-year performance.

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Tan Chong Motor Holdings Berhad isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.

Tan Chong Motor Holdings Berhad actually shrunk its revenue over the last year, with a reduction of 14%. Despite the lack of revenue growth, the stock has returned a solid 35% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We're pleased to report that Tan Chong Motor Holdings Berhad shareholders have received a total shareholder return of 35% over one year. And that does include the dividend. Notably the five-year annualised TSR loss of 3% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. 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. Take risks, for example - Tan Chong Motor Holdings Berhad has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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