The Shifeng Cultural Development Co., Ltd. (SZSE:002862) share price has had a bad week, falling 22%. But that doesn't undermine the rather lovely longer-term return, if you measure over the last three years. In three years the stock price has launched 127% higher: a great result. It's not uncommon to see a share price retrace a bit, after a big gain. Only time will tell if there is still too much optimism currently reflected in the share price.

In light of the stock dropping 22% 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 Shifeng Cultural Development didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Shifeng Cultural Development actually saw its revenue drop by 0.8% per year over three years. So we wouldn't have expected the share price to gain 32% per year, but it has. It's a good reminder that expectations about the future, not the past history, always impact share prices.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Shifeng Cultural Development's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Shifeng Cultural Development shareholders have received a total shareholder return of 43% over the last year. That gain is better than the annual TSR over five years, which is 15%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Shifeng Cultural Development better, we need to consider many other factors. For example, we've discovered 2 warning signs for Shifeng Cultural Development that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.