Studio City International Holdings (NYSE:MSC) shareholders rose 20% last week, but are still in the red for the past three years

Studio City International Holdings Limited (NYSE:MSC) Shareholders should be happy to see the stock price rise 20% last week. But the last three years have seen a terrible decline. Meanwhile, the stock price melted like a snowball in the desert, down 90%. So it’s nice to see a bit of improvement. The thing to think about is whether the business has truly recovered. While a drop like that is definitely a blow, money isn’t as important as health and happiness.

While the past three years have been difficult for shareholders of Studio City International Holdings, 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.

However, if you prefer to see where opportunities and risks are within MSC’s industryyou can consult our analysis of the hotel industry in the United States.

Studio City International Holdings has not been profitable for the past twelve months, we are unlikely to see a strong correlation between its stock price and earnings per share (EPS). Income is arguably our second best option. When a business is not making a profit, you generally expect to see good revenue growth. As you can imagine, rapid revenue growth, when sustained, often results in rapid profit growth.

Over the past three years, Studio City International Holdings has seen its revenue decline by 82% per year. This means that its revenue trend is very low compared to other loss-making companies. And as you might expect, the stock price has also been weak, falling at a rate of 24% per year. We prefer to leave it to the clowns to try and catch the falling knives, like this stock. There’s a good reason why investors often describe buying a sharply falling stock price as “trying to catch a falling knife.” Think about it.

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

NYSE: MSC Earnings and Revenue Growth September 20, 2022

Take a closer look at the financial health of Studio City International Holdings with this free report on its balance sheet.

A different perspective

Studio City International Holdings shareholders are down 78% for the year, below market performance. The market lost around 15%, probably weighing on the stock price. Shareholders have lost 24% annually over the past three years, so the share price decline has become more pronounced over the past year; a potential symptom of unresolved challenges. Although Baron Rothschild said “buy when there is blood in the streets, even if the blood is yours”, he also focuses on high quality stocks with strong prospects. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take for example the ubiquitous specter of investment risk. We have identified 3 warning signs with Studio City International Holdings (at least 1, which makes us a little uneasy), and understanding them should be part of your investment process.

If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of companies that have proven that they can increase their profits.

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

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