Taking the occasional loss comes part and parcel with investing on the stock market. And unfortunately for JILIN JINGUAN ELECTRIC Co.,Ltd (SZSE:300510) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 52% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 35% lower than three years ago). Shareholders have had an even rougher run lately, with the share price down 21% in the last 90 days.

If the past week is anything to go by, investor sentiment for JILIN JINGUAN ELECTRICLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

While JILIN JINGUAN ELECTRICLtd made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In just one year JILIN JINGUAN ELECTRICLtd saw its revenue fall by 3.5%. That looks pretty grim, at a glance. The share price drop of 52% is understandable given the company doesn't have profits to boast of. Having said that, if growth is coming in the future, the stock may have better days ahead. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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

While the broader market lost about 12% in the twelve months, JILIN JINGUAN ELECTRICLtd shareholders did even worse, losing 52%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. We realise that Baron Rothschild 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 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 risks, for instance. Every company has them, and we've spotted 2 warning signs for JILIN JINGUAN ELECTRICLtd you should know about.

But note: JILIN JINGUAN ELECTRICLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.