It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For instance the A-Zenith Home Furnishings Co., Ltd. (SHSE:603389) share price is 112% higher than it was three years ago. How nice for those who held the stock! It's also up 76% in about a month.
Since it's been a strong week for A-Zenith Home Furnishings shareholders, let's have a look at trend of the longer term fundamentals.
A-Zenith Home Furnishings 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
A-Zenith Home Furnishings actually saw its revenue drop by 12% per year over three years. So we wouldn't have expected the share price to gain 28% per year, but it has. It's fair to say shareholders are definitely counting on a bright future.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling A-Zenith Home Furnishings stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that A-Zenith Home Furnishings shareholders have received a total shareholder return of 53% over the last year. That certainly beats the loss of about 3% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand A-Zenith Home Furnishings better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for A-Zenith Home Furnishings you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.