Investors Who Bought Kenly Precision Industrial (GTSM:5383) Shares Three Years Ago Are Now Up 90%

By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. For example, the Kenly Precision Industrial Co., LTD. (GTSM:5383) share price is up 90% in the last three years, clearly besting the market return of around 42% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 32% in the last year.

View our latest analysis for Kenly Precision Industrial

Because Kenly Precision Industrial made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 3 years Kenly Precision Industrial saw its revenue shrink by 12% per year. Despite the lack of revenue growth, the stock has returned 24%, compound, over three years. Unless the company is going to make profits soon, we would be pretty cautious about it.

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 Kenly Precision Industrial's financial health with this free report on its balance sheet.

A Different Perspective

Kenly Precision Industrial provided a TSR of 32% over the last twelve months. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 12% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Kenly Precision Industrial (of which 1 is potentially serious!) you should know about.

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 TW 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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