For many, the main point of investing is to generate higher returns than the overall market. But the main game is to find enough winners to more than offset the losers So we wouldn't blame long term Xiamen XGMA Machinery Company Limited (SHSE:600815) shareholders for doubting their decision to hold, with the stock down 40% over a half decade. And it's not just long term holders hurting, because the stock is down 28% in the last year. More recently, the share price has dropped a further 18% in a month.

With the stock having lost 11% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Because Xiamen XGMA Machinery made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last five years Xiamen XGMA Machinery saw its revenue shrink by 21% per year. That's definitely a weaker result than most pre-profit companies report. On the face of it we'd posit the share price fall of 7% compound, over five years is well justified by the fundamental deterioration. We doubt many shareholders are delighted with this share price performance. Risk averse investors probably wouldn't like this one much.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on Xiamen XGMA Machinery's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that Xiamen XGMA Machinery shareholders are down 28% for the year. Unfortunately, that's worse than the broader market decline of 10%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% per year over five years. 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.