For many investors, the main point of stock picking is to generate higher returns than the overall market. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Jinneng Holding Shanxi Electric Power Co.,LTD. (SZSE:000767) shareholders have had that experience, with the share price dropping 30% in three years, versus a market decline of about 14%. The last week also saw the share price slip down another 5.8%.

Since Jinneng Holding Shanxi Electric PowerLTD has shed CN¥492m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Jinneng Holding Shanxi Electric PowerLTD isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over three years, Jinneng Holding Shanxi Electric PowerLTD grew revenue at 5.1% per year. That's not a very high growth rate considering it doesn't make profits. The stock dropped 9% during that time. If revenue growth accelerates, we might see the share price bounce. But the real upside for shareholders will be if the company can start generating profits.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Jinneng Holding Shanxi Electric PowerLTD's earnings, revenue and cash flow.

A Different Perspective

Jinneng Holding Shanxi Electric PowerLTD shareholders are down 11% for the year, but the market itself is up 15%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 1.4%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Jinneng Holding Shanxi Electric PowerLTD you should know about.

Of course Jinneng Holding Shanxi Electric PowerLTD may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.