In This Article:
We think intelligent long term investing is the way to go. But no-one is immune from buying too high. To wit, the Lianhua Supermarket Holdings Co., Ltd. (HKG:980) share price managed to fall 68% over five long years. We certainly feel for shareholders who bought near the top. And some of the more recent buyers are probably worried, too, with the stock falling 21% in the last year. Shareholders have had an even rougher run lately, with the share price down 16% in the last 90 days.
See our latest analysis for Lianhua Supermarket Holdings
Given that Lianhua Supermarket 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over half a decade Lianhua Supermarket Holdings reduced its trailing twelve month revenue by 3.4% for each year. While far from catastrophic that is not good. With neither profit nor revenue growth, the loss of 20% per year doesn't really surprise us. The chance of imminent investor enthusiasm for this stock seems slimmer than Louise Brooks. Not that many investors like to invest in companies that are losing money and not growing revenue.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
While the broader market gained around 1.6% in the last year, Lianhua Supermarket Holdings shareholders lost 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 20% 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. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Lianhua Supermarket Holdings by clicking this link.