It's good to see Imperium Technology Group Limited (HKG:776) shares up 26% in a week. However, the fact remains that the returns over the past three years have been horrendous. In fact, the share price has fallen by 82% over the past three years. So, for long-term holders, it's a relief to see some upside. The question to ask is whether the business has truly turned around. While a fall like this is certainly a big blow, money isn't as important as health and happiness.
While the share price is up 26% in the last week, long term shareholders are still in the red. Let's see what the fundamentals can tell us.
Check out our latest analysis for Imperium Technology Group
Imperium Technology Group hasn't made a profit in the last twelve months, so we're unlikely to see a strong correlation between its share price and its earnings per share (EPS). Revenues are probably the next best option. When a company isn't making profits, we generally want to see good revenue growth, as it's hard to be confident that a company is sustainable if revenue growth is negligible and it's not profitable.
Over the past three years, Imperium Technology Group's revenues have fallen 25% per year. This means that the company's earnings trend is very weak compared to other loss-making companies. The sharp decline in the share price at a compound rate of 22% per year reflects this weak underlying performance. Never forget that loss-making companies with falling revenues can and do cause losses for public investors. It's worth remembering that investors call buying a plummeting stock “catching a falling knife” because it's a dangerous pastime.
The image below shows how earnings and revenue have changed over time (if you click on the image you can see greater detail).
SEHK:776 Revenue and Sales Growth August 24, 2024
If you are thinking of buying or selling Imperium Technology Group shares, you should check out this free detailed report on the company's balance sheet .
A different perspective
Imperium Technology Group shareholders are down 59% this year, while the market itself is up 8.3%. Even the share prices of blue chip stocks fall from time to time, but we like to see improving fundamental metrics for the business before getting too interested. Long term investors probably won't be too upset, with a gain of 5% per year over five years. If the fundamental data continues to point to sustainable growth over the long term, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share prices over the long term as a proxy for business performance. However, to gain real insight, you need to consider other information as well. For example, we've spotted 5 warning signs for Imperium Technology Group (4 are a bit unpleasant!) that you should be aware of before investing.
If you would prefer to check out other companies — some of which may be superior financially — then do not miss this free list of companies that have proven they can grow earnings.
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 of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
