Many investors define successful investing as beating the market average over the long term. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term Neusoft Corporation (SHSE:600718) shareholders, since the share price is down 28% in the last three years, falling well short of the market decline of around 17%. Unfortunately the share price momentum is still quite negative, with prices down 8.6% in thirty days. We do note, however, that the broader market is down 6.1% in that period, and this may have weighed on the share price.

If the past week is anything to go by, investor sentiment for Neusoft isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

We don't think that Neusoft's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. 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.

In the last three years, Neusoft saw its revenue grow by 9.3% per year, compound. That's a pretty good rate of top-line growth. Shareholders have endured a share price decline of 9% per year. This implies the market had higher expectations of Neusoft. With revenue growing at a solid clip, now might be the time to focus on the possibility that it will have a brighter future.

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

We know that Neusoft has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Neusoft

A Different Perspective

It's nice to see that Neusoft shareholders have received a total shareholder return of 9.0% over the last year. That's including the dividend. That certainly beats the loss of about 3% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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 2 warning signs for Neusoft you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.