If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. For example, the CECEP Environmental Protection Equipment Co.,Ltd. (SZSE:300140) share price is up 36% in the last 1 year, clearly besting the market decline of around 8.9% (not including dividends). So that should have shareholders smiling. Zooming out, the stock is actually down 4.0% in the last three years.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for CECEP Environmental Protection EquipmentLtd

Because CECEP Environmental Protection EquipmentLtd 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

CECEP Environmental Protection EquipmentLtd actually shrunk its revenue over the last year, with a reduction of 20%. The stock is up 36% in that time, a fine performance given the revenue drop. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

If you are thinking of buying or selling CECEP Environmental Protection EquipmentLtd stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that CECEP Environmental Protection EquipmentLtd has rewarded shareholders with a total shareholder return of 36% in the last twelve months. That's better than the annualised return of 2% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with CECEP Environmental Protection EquipmentLtd (at least 1 which is significant) , and understanding them should be part of your investment process.

But note: CECEP Environmental Protection EquipmentLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.