Zhonglu.Co.,Ltd (SHSE:600818) shareholders have seen the share price descend 12% over the month. But don't let that distract from the very nice return generated over three years. After all, the share price is up a market-beating 67% in that time.

In light of the stock dropping 8.7% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.

Given that Zhonglu.Co.Ltd only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Over the last three years Zhonglu.Co.Ltd has grown its revenue at 13% annually. That's pretty nice growth. While the share price has done well, compounding at 19% yearly, over three years, that move doesn't seem over the top. Of course, valuation is quite sensitive to the rate of growth. Of course, it's always worth considering funding risks when a company isn't profitable.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

Zhonglu.Co.Ltd provided a TSR of 1.9% over the last twelve months. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 0.8% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Zhonglu.Co.Ltd better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Zhonglu.Co.Ltd you should know about.

But note: Zhonglu.Co.Ltd 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.

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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.