Lung Hwa Electronics (TWSE:2424) surges 21% this week, taking three-year gains to 230%

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But in contrast you can make much more than 100% if the company does well. For example, the Lung Hwa Electronics Co., Ltd. (TWSE:2424) share price has soared 230% in the last three years. That sort of return is as solid as granite. And in the last month, the share price has gained 24%. This could be related to the recent financial results that were recently released - you could check the most recent data by reading our company report.

The past week has proven to be lucrative for Lung Hwa Electronics investors, so let's see if fundamentals drove the company's three-year performance.

Lung Hwa Electronics 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Over the last three years Lung Hwa Electronics has grown its revenue at 46% annually. That's well above most pre-profit companies. Meanwhile, the share price performance has been pretty solid at 49% compound over three years. This suggests the market has recognized the progress the business has made, at least to a significant degree. That's not to say we think the share price is too high. In fact, it might be worth keeping an eye on this one.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Lung Hwa Electronics' financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Lung Hwa Electronics shareholders have received a total shareholder return of 132% over the last year. That's better than the annualised return of 15% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Lung Hwa Electronics (1 is a bit unpleasant!) that you should be aware of before investing here.

But note: Lung Hwa Electronics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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