Genetron Holdings Limited (NASDAQ:GTH) shareholders will doubtless be very grateful to see the share price up 36% in the last week. But that doesn't change the fact that the returns over the last year have been stomach churning. Indeed, the share price is down a whopping 89% in the last year. It's not uncommon to see a bounce after a drop like that. The important thing is whether the company can turn it around, longer term. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
While the last year has been tough for Genetron Holdings shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.
Given that Genetron Holdings 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Genetron Holdings grew its revenue by 25% over the last year. That's definitely a respectable growth rate. Unfortunately, the market wanted something better, given it sent the share price 89% lower during the year. It could be that the losses are too much for investors to handle without losing their nerve. We'd posit that the future looks challenging, given the disconnect between revenue growth and the share price.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Take a more thorough look at Genetron Holdings' financial health with this free report on its balance sheet.
A Different Perspective
We doubt Genetron Holdings shareholders are happy with the loss of 89% over twelve months. That falls short of the market, which lost 7.1%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 8.7% over the last three months, the market doesn't seem to believe that the company has solved all its problems. 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 Genetron Holdings better, we need to consider many other factors. Even so, be aware that Genetron Holdings is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
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