Long term investing is the way to go, but that doesn't mean you should hold every stock forever. We don't wish catastrophic capital loss on anyone. Spare a thought for those who held AVIC Joy Holdings (HK) Limited (HKG:260) for five whole years - as the share price tanked 82%. We also note that the stock has performed poorly over the last year, with the share price down 52%. The falls have accelerated recently, with the share price down 29% in the last three months.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
View our latest analysis for AVIC Joy Holdings (HK)
Because AVIC Joy Holdings (HK) is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 five years AVIC Joy Holdings (HK) saw its revenue shrink by 42% per year. That's definitely a weaker result than most pre-profit companies report. So it's not altogether surprising to see the share price down 29% per year in the same time period. This kind of price performance makes us very wary, especially when combined with falling revenue. Ironically, that behavior could create an opportunity for the contrarian investor - but only if there are good reasons to predict a brighter future.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on AVIC Joy Holdings (HK)'s earnings, revenue and cash flow.
A Different Perspective
We regret to report that AVIC Joy Holdings (HK) shareholders are down 52% for the year. Unfortunately, that's worse than the broader market decline of 4.7%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 29% per year over five years. We realise that Buffett 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 businesses. You could get a better understanding of AVIC Joy Holdings (HK)'s growth by checking out this more detailed historical graph of earnings, revenue and cash flow.