Buying a low-cost index fund will get you the average market return. But across the board there are plenty of stocks that underperform the market. That's what has happened with the Kandi Technologies Group, Inc. (NASDAQ:KNDI) share price. It's up 40% over three years, but that is below the market return. Having said that, the 30% increase over the past year is good to see.
Because Kandi Technologies Group 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. Shareholders of unprofitable companies usually expect strong revenue growth. 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 3 years Kandi Technologies Group saw its revenue shrink by 3.6% per year. The modest share price gain of 12% per year suggests holders are sanguine about the falling revenue. As a general rule we don't like it when a loss-making company isn't even growing revenue.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on Kandi Technologies Group
A Different Perspective
Kandi Technologies Group shareholders gained a total return of 30% during the year. But that return falls short of the market. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 3% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Kandi Technologies Group better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Kandi Technologies Group you should be aware of.
Of course Kandi Technologies Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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