Investors in Pacific Century Premium Developments (HKG:432) from five years ago are still down 65%, even after 37% gain this past week

Over the last month the Pacific Century Premium Developments Limited (HKG:432) has been much stronger than before, rebounding by 45%. But don't envy holders -- looking back over 5 years the returns have been really bad. In fact, the share price has declined rather badly, down some 65% in that time. So we're hesitant to put much weight behind the short term increase. We'd err towards caution given the long term under-performance.

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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Pacific Century Premium Developments isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Over five years, Pacific Century Premium Developments grew its revenue at 4.1% per year. That's far from impressive given all the money it is losing. This lacklustre growth has no doubt fueled the loss of 11% per year, in that time. We'd want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in Pacific Century Premium Developments. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term).

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

It's nice to see that Pacific Century Premium Developments shareholders have received a total shareholder return of 43% over the last year. That certainly beats the loss of about 11% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Pacific Century Premium Developments , and understanding them should be part of your investment process.

Of course Pacific Century Premium Developments 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.