Natural Beauty Bio-Technology (HKG:157) dips 13% this week as increasing losses might not be inspiring confidence among its investors
Ideally, your overall portfolio should beat the market average. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in Natural Beauty Bio-Technology Limited (HKG:157), since the last five years saw the share price fall 35%. The falls have accelerated recently, with the share price down 21% in the last three months.
After losing 13% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
Given that Natural Beauty Bio-Technology didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over half a decade Natural Beauty Bio-Technology reduced its trailing twelve month revenue by 4.3% for each year. That's not what investors generally want to see. The stock hasn't done well for shareholders in the last five years, falling 6%, annualized. But it doesn't surprise given the falling revenue. Without profits, its hard to see how shareholders win if the revenue keeps falling.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Natural Beauty Bio-Technology's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Natural Beauty Bio-Technology shareholders are down 12% for the year, but the market itself is up 32%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Natural Beauty Bio-Technology better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Natural Beauty Bio-Technology you should know about.
Of course Natural Beauty Bio-Technology may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong 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.