Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of Aurora Optoelectronics Co.,Ltd. (SHSE:600666) have suffered share price declines over the last year. To wit the share price is down 52% in that time. However, the longer term returns haven't been so bad, with the stock down 23% in the last three years. Unfortunately the share price momentum is still quite negative, with prices down 23% in thirty days.

With the stock having lost 14% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Aurora OptoelectronicsLtd wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In just one year Aurora OptoelectronicsLtd saw its revenue fall by 15%. That's not what investors generally want to see. The share price drop of 52% is understandable given the company doesn't have profits to boast of. Fingers crossed this is the low ebb for the stock. We have a natural aversion to companies that are losing money and shrinking revenue. But perhaps that is being too careful.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We regret to report that Aurora OptoelectronicsLtd shareholders are down 52% for the year. Unfortunately, that's worse than the broader market decline of 10%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Aurora OptoelectronicsLtd better, we need to consider many other factors. For instance, we've identified 1 warning sign for Aurora OptoelectronicsLtd that you should be aware of.

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 Chinese 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.