Easy Come, Easy Go: How DQ Entertainment (International) (NSE:DQE) Shareholders Got Unlucky And Saw 77% Of Their Cash Evaporate – Simply Wall St
It’s nice to see the DQ Entertainment (International) Limited (NSE:DQE) share price up 14% in a week.
But spare a thought for the long term holders, who have held the stock as it bled value over the last five years.
Five years have seen the share price descend precipitously, down a full 77%.
While the recent increase might be a green shoot, we’re certainly hesitant to rejoice.
The important question is if the business itself justifies a higher share price in the long term.
Because DQ Entertainment (International) is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now.
Shareholders of unprofitable companies usually expect strong revenue growth.
That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Over half a decade DQ Entertainment (International) reduced its trailing twelve month revenue by 23% for each year.
That puts it in an unattractive cohort, to put it mildly.
So it’s not altogether surprising to see the share price down 25% per year in the same time period.
We don’t think this is a particularly promising picture.
Ironically, that behavior could create an opportunity for the contrarian investor – but only if there are good reasons to predict a brighter future.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
This free interactive report on DQ Entertainment (International)’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
DQ Entertainment (International) shareholders are down 44% for the year, but the market itself is up 0.7%.
Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested.
Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 25% over the last half decade.
We realise that Buffett has said investors should ‘buy when there is blood on the streets’, but we caution that investors should first be sure they are buying a high quality businesses.
You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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