Alset International Limited (Catalist:40V) shareholders should be happy to see the share price up 13% in the last month. But that doesn't change the fact that the returns over the last five years have been less than pleasing. After all, the share price is down 39% in that time, significantly under-performing the market.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
See our latest analysis for Alset International
Given that Alset International 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over five years, Alset International grew its revenue at 4.6% per year. That's far from impressive given all the money it is losing. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 7% (annualized) in the same time frame. Investors should consider how bad the losses are, and whether the company can make it to profitability with ease. It could be worth putting it on your watchlist and revisiting when it makes its maiden profit.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on Alset International's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Alset International shareholders are down 33% for the year, but the market itself is up 4.0%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Alset International better, we need to consider many other factors. For instance, we've identified 3 warning signs for Alset International (1 is a bit unpleasant) that you should be aware of.