TDH Holdings, Inc. (NASDAQ:PETZ) shareholders should be happy to see the share price up 27% in the last quarter. But the last three years have seen a terrible decline. To wit, the share price sky-dived 71% in that time. So we're relieved for long term holders to see a bit of uplift. The thing to think about is whether the business has really turned around.
Given that TDH Holdings didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last three years, TDH Holdings' revenue dropped 37% per year. That means its revenue trend is very weak compared to other loss making companies. And as you might expect the share price has been weak too, dropping at a rate of 20% per year. We prefer leave it to clowns to try to catch falling knives, like this stock. There is a good reason that investors often describe buying a sharply falling stock price as 'trying to catch a falling knife'. Think about it.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on TDH Holdings' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
TDH Holdings shareholders have gained 23% over twelve months. This isn't far from the market return of 24%. Shareholders can take comfort that it's certainly better than the yearly loss of about 20% per year endured over the last three years. It could well be that the business is getting back on track. It's always interesting to track share price performance over the longer term. But to understand TDH Holdings better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for TDH Holdings (of which 1 makes us a bit uncomfortable!) you should know about.
Of course TDH Holdings 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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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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