China Ocean Group Development (HKG: 8047) shareholders rose 32% last week, but still in the red for the past three years

It is a pleasure to announce that the China Ocean Group Development Limited (HKG: 8047) is up 34% in the last quarter. But only the short-sighted could ignore the astonishing decline over three years. The stock price sank like a leaking ship, down 83% during that time. So it’s good to see a little improvement. Of course, the real question is whether the company can sustain a turnaround. We really feel for the shareholders in this scenario. It’s a good reminder of the importance of diversification, and it’s worth keeping in mind that life isn’t just about money, anyway.

The recent 32% rise could be a positive sign of things to come, so let’s take a hard look at historical fundamentals.

Check out our latest analysis for the development of China Ocean Group

Since China Ocean Group Development has not made a profit in the past twelve months, we will focus on revenue growth to get a quick view of its business development. When a business is not making a profit, we generally expect good revenue growth. This is because it is difficult to be sure that a business will be sustainable if the revenue growth is negligible and it never makes a profit.

In the past three years, the turnover of China Ocean Group Development has fallen by 28% per year. This is certainly a lower result than what most nonprofits report. And as you might expect, the stock price was also low, falling at a rate of 22% per year. We prefer to leave it to the clowns to try and catch falling knives, like this stock. It should be remembered that investors call buying a sharply falling stock “catching a falling knife” because it is a dangerous hobby.

The company’s revenue and profits (over time) are shown in the image below (click to see exact numbers).

SEHK: 8047 Profit and Revenue Growth on December 29, 2021

This free China Ocean Group Development’s interactive balance sheet strength report is a great place to start if you want to study the stock further.

A different perspective

We regret to report that the shareholders of China Ocean Group Development are down 58% for the year. Unfortunately, this is worse than the broader market drop of 3.6%. That said, it is inevitable that some stocks will be oversold in a declining market. The key is to keep your eyes on fundamental developments. Sadly, last year’s performance may indicate unresolved challenges, given it was worse than the 11% annualized loss over the past five years. Generally speaking, long-term weakness in stock prices can be a bad sign, although contrarian investors may want to seek the stock in hopes of a rally. I find it very interesting to look at the stock price over the long term as an indicator of company performance. But to really understand better, we have to take other information into account as well. Consider, for example, the ever-present specter of investment risk. We have identified 4 warning signs with China Ocean Group Development (at least 1 which is not too good for us), and understanding them should be part of your investment process.

But beware : China Ocean Group Development May Not Be The Best Stock To Buy. So take a look at this free list of interesting companies with past earnings growth (and new growth forecasts).

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on the Hong Kong stock exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

Sara H. Byrd