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While not a mind-blowing move, it is good to see that the Cornerstone Financial Holdings Limited (HKG:8112) share price has gained 24% in the last three months. But spare a thought for the long term holders, who have held the stock as it bled value over the last five years. Indeed, the share price is down a whopping 99% in that time. It's true that the recent bounce could signal the company is turning over a new leaf, but we are not so sure. The important question is if the business itself justifies a higher share price in the long term.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Check out our latest analysis for Cornerstone Financial Holdings
Cornerstone Financial Holdings 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last half decade, Cornerstone Financial Holdings saw its revenue increase by 8.6% per year. That's a fairly respectable growth rate. So the stock price fall of 61% per year seems pretty steep. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling Cornerstone Financial Holdings stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We regret to report that Cornerstone Financial Holdings shareholders are down 50% for the year. Unfortunately, that's worse than the broader market decline of 5.4%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. However, the loss over the last year isn't as bad as the 61% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. You could get a better understanding of Cornerstone Financial Holdings's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.