Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Anyone who held Kangmei Pharmaceutical Co., Ltd. (SHSE:600518) for five years would be nursing their metaphorical wounds since the share price dropped 84% in that time. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

Check out our latest analysis for Kangmei Pharmaceutical

Because Kangmei Pharmaceutical 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last five years Kangmei Pharmaceutical saw its revenue shrink by 34% per year. That puts it in an unattractive cohort, to put it mildly. So it's not altogether surprising to see the share price down 13% per year in the same time period. We don't think this is a particularly promising picture. Of course, the poor performance could mean the market has been too severe selling down. That can happen.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

If you are thinking of buying or selling Kangmei Pharmaceutical stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Kangmei Pharmaceutical shareholders have received a total shareholder return of 2.2% over the last year. That certainly beats the loss of about 13% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Kangmei Pharmaceutical better, we need to consider many other factors. For instance, we've identified 1 warning sign for Kangmei Pharmaceutical that you should be aware of.

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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.