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Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by EDICO Holdings Limited (HKG:8450) shareholders over the last year, as the share price declined 49%. That's disappointing when you consider the market returned -15%. Because EDICO Holdings hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 22% in the last three months. But this could be related to the weak market, which is down 14% in the same period.
See our latest analysis for EDICO Holdings
EDICO 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. 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 does expect good top-line growth.
In just one year EDICO Holdings saw its revenue fall by 26%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 49% in that time. That seems pretty reasonable given the lack of both profits and revenue growth. It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
EDICO Holdings shareholders are down 49% for the year, even worse than the market loss of 15%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 22%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand EDICO Holdings better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for EDICO Holdings you should be aware of, and 2 of them shouldn't be ignored.
But note: EDICO Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).