Wai Kee Holdings Limited (HKG:610) shareholders should be happy to see the share price up 25% in the last quarter. But that doesn't change the fact that the returns over the last half decade have been stomach churning. Five years have seen the share price descend precipitously, down a full 80%. So we don't gain too much confidence from the recent recovery. The real question is whether the business can leave its past behind and improve itself over the years ahead.

Although the past week has been more reassuring for shareholders, they're still in the red over the last five years, so let's see if the underlying business has been responsible for the decline.

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Because Wai Kee Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over five years, Wai Kee Holdings grew its revenue at 13% per year. That's a fairly respectable growth rate. So it is unexpected to see the stock down 12% per year in the last five years. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.

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 Wai Kee Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Wai Kee Holdings' total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Wai Kee Holdings' TSR, which was a 77% drop over the last 5 years, was not as bad as the share price return.

A Different Perspective

Investors in Wai Kee Holdings had a tough year, with a total loss of 2.6%, against a market gain of about 51%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 12% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Wai Kee Holdings is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

We will like Wai Kee Holdings better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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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