Studio City International Holdings Limited (NYSE:MSC) Shareholders should be pleased to see the stock price rise 11% over the past month. But that’s no great consolation for those who suffered from last year’s declines. Like a retreating glacier in a warming world, the stock price has melted 63% during this period. It’s not so surprising to see a rebound after a fall like that. Of course, it could be that the fall was exaggerated.
Given that shareholders are down longer term, let’s take a look at the underlying fundamentals over this period and see if they have been consistent with returns.
Since Studio City International Holdings has not made a profit in the last twelve months, we will focus on revenue growth to get a quick overview of its business development. When a business is not making a profit, you generally expect to see good revenue growth. Indeed, it is difficult to be sure that a business will be sustainable if revenue growth is negligible and it never makes a profit.
Studio City International Holdings’ revenue did not increase at all last year. In fact, it dropped 47%. This is generally not what investors want to see. The 63% drop in share price is understandable given that the company has no earnings to brag about. That said, if growth is to come, the stock could have better days ahead. We have a natural aversion to companies that lose money and decrease revenue. But that may be too cautious.
The image below shows how earnings and income have tracked over time (if you click on the image you can see more details).
If you are considering buying or selling shares of Studio City International Holdings, you should check out this FREE detailed report on its balance sheet.
A different perspective
Over the past year, shareholders of Studio City International Holdings have suffered a loss of 63%. In contrast, the market gained around 12%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The loss of 16% per year over three years is not as bad as the last twelve months, which suggests that the company has not been able to convince the market that it has solved its problems. 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. 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. Like risks, for example. Every business has them, and we’ve spotted 2 warning signs for Studio City International Holdings (1 of which is a little worrying!) that you should know about.
Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of companies that we believe will 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.
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