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Imagine Owning Classified Group (Holdings) (HKG:8232) And Taking A 97% Loss Square On The Chin

It's not possible to invest over long periods without making some bad investments. But you have a problem if you face massive losses more than once in a while. So spare a thought for the long term shareholders of Classified Group (Holdings) Limited (HKG:8232); the share price is down a whopping 97% in the last three years. That'd be enough to cause even the strongest minds some disquiet. And more recent buyers are having a tough time too, with a drop of 54% in the last year.

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.

See our latest analysis for Classified Group (Holdings)

Classified Group (Holdings) wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. 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 three years Classified Group (Holdings) saw its revenue shrink by 13% per year. That's not what investors generally want to see. Having said that the 69% annualized share price decline highlights the risk of investing in unprofitable companies. This business clearly needs to grow revenues if it is to perform as investors hope. Don't let a share price decline ruin your calm. You make better decisions when you're calm.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

SEHK:8232 Income Statement April 2nd 2020
SEHK:8232 Income Statement April 2nd 2020

This free interactive report on Classified Group (Holdings)'s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Classified Group (Holdings) shareholders are down 54% for the year, falling short of the market return. Meanwhile, the broader market slid about 20%, likely weighing on the stock. However, the loss over the last year isn't as bad as the 69% per annum loss investors have suffered over the last three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 4 warning signs for Classified Group (Holdings) you should be aware of, and 2 of them are significant.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.