Market cap

GCL New Energy Holdings (HKG:451) adds C$569m to market cap in last 7 days, though investors from five years ago are still down 56%

It’s nice to see the GCL New Energy Holdings Limited (HKG:451) share price up 20% in one week. But that can’t change the reality that over the longer term (five years) the returns have been really quite dismal. Indeed, the share price is down 56% over the period. So is the recent rise enough to restore confidence in the stock? Not yet. However, in the best case (far from fait accompli), this performance improvement can be maintained.

While the past five years have been difficult for GCL New Energy Holdings shareholders, the past week has shown promising signs. So let’s take a look at the longer-term fundamentals and see if they were the driver of the negative returns.

Check out our latest analysis for GCL New Energy Holdings

GCL New Energy Holdings is currently unprofitable, so most analysts would look to revenue growth to get a sense of how fast the underlying business is growing. Shareholders of unprofitable companies generally expect strong revenue growth. Some companies are ready to postpone profitability to increase revenue faster, but in this case, good revenue growth is expected.

Over the past five years, GCL New Energy Holdings has seen its revenue increase by 4.8% per year. It’s far from impressive considering all the money he loses. This lackluster growth no doubt fueled the loss of 9% per year, at that time. We would like to see evidence that future revenue growth is likely to be much stronger before we dwell too much on GCL New Energy Holdings. However, it is possible that too many people in the market are ignoring it, and there may be an opportunity if it starts to recover on the right track.

The company’s revenues and profits (over time) are shown in the image below (click to see exact figures).

SEHK: 451 Profit and Revenue Growth June 2, 2022

This free The GCL New Energy Holdings Interactive Balance Sheet Strength Report is a great place to start if you want to dive deeper into the stock.

A different perspective

While the broader market lost around 22% in the twelve months, GCL New Energy Holdings shareholders fared even worse, losing 27%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. Unfortunately, last year’s performance capped a bad run, with shareholders facing a total loss of 9% per year over five years. Generally speaking, long-term stock price weakness can be a bad sign, although contrarian investors may want to seek out the stock in hopes of a turnaround. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Even so, know that GCL New Energy Holdings shows 2 warning signs in our investment analysis and 1 of them cannot be ignored…

If you’re like me, then you not want to miss this free list of growing companies insiders are buying.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on HK exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.