By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, the HCK Capital Group Berhad (KLSE:HCK) share price is up 75% in the last three years, clearly besting the market decline of around 7.7% (not including dividends).
So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.
Check out our latest analysis for HCK Capital Group Berhad
We don't think that HCK Capital Group Berhad's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 3 years HCK Capital Group Berhad saw its revenue grow at 21% per year. That's well above most pre-profit companies. While the compound gain of 20% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at HCK Capital Group Berhad. A window of opportunity may reveal itself with time, if the business can trend to profitability.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
While it's certainly disappointing to see that HCK Capital Group Berhad shares lost 0.9% throughout the year, that wasn't as bad as the market loss of 8.1%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 9% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. It's always interesting to track share price performance over the longer term. But to understand HCK Capital Group Berhad better, we need to consider many other factors. Take risks, for example - HCK Capital Group Berhad has 3 warning signs (and 2 which can't be ignored) we think you should know about.