Investors ignore increasing losses at AboCom Systems (TWSE:2444) as stock jumps 12% this past week

By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, AboCom Systems, Inc. (TWSE:2444) shareholders have seen the share price rise 55% over three years, well in excess of the market return (26%, not including dividends).

Since it's been a strong week for AboCom Systems shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for AboCom Systems

Because AboCom Systems 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 hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 3 years AboCom Systems saw its revenue shrink by 2.8% per year. Despite the lack of revenue growth, the stock has returned 16%, compound, over three years. Unless the company is going to make profits soon, we would be pretty cautious about it.

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

Take a more thorough look at AboCom Systems' financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that AboCom Systems shareholders have received a total shareholder return of 50% over one year. Notably the five-year annualised TSR loss of 0.5% per year compares very unfavourably with the recent share price performance. 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 AboCom Systems better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with AboCom Systems (including 1 which is a bit unpleasant) .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.