It is a pleasure to report that the Huayi Brothers Media Corporation (SZSE:300027) is up 57% in the last quarter. But over the last half decade, the stock has not performed well. In fact, the share price is down 26%, which falls well short of the return you could get by buying an index fund.

On a more encouraging note the company has added CN¥916m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

Because Huayi Brothers Media 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

In the last five years Huayi Brothers Media saw its revenue shrink by 31% per year. That's definitely a weaker result than most pre-profit companies report. It seems pretty reasonable to us that the share price dipped 5% per year in that time. This loss means the stock shareholders are probably pretty annoyed. It is possible for businesses to bounce back but as Buffett says, 'turnarounds seldom turn'.

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

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

A Different Perspective

It's good to see that Huayi Brothers Media has rewarded shareholders with a total shareholder return of 19% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 5% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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. For instance, we've identified 1 warning sign for Huayi Brothers Media that you should be aware of.

We will like Huayi Brothers Media better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.