While it may not be enough for some shareholders, we think it is good to see the Shenzhen Worldunion Group Incorporated (SZSE:002285) share price up 24% in a single quarter. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 31% in the last three years, falling well short of the market return.

With the stock having lost 13% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Because Shenzhen Worldunion Group 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Over the last three years, Shenzhen Worldunion Group's revenue dropped 31% 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 9% compound, over three years is well justified by the fundamental deterioration. It would probably be worth asking whether the company can fund itself to profitability. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.

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

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

A Different Perspective

Shenzhen Worldunion Group provided a TSR of 15% over the year. That's fairly close to the broader market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 5%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for Shenzhen Worldunion Group. 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. For example, we've discovered 2 warning signs for Shenzhen Worldunion Group (1 shouldn't be ignored!) that you should be aware of before investing here.

We will like Shenzhen Worldunion Group 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.