The main aim of stock picking is to find the market-beating stocks. But every investor is virtually certain to have both over-performing and under-performing stocks. At this point some shareholders may be questioning their investment in Shenzhen Institute of Building Research Co., Ltd. (SZSE:300675), since the last five years saw the share price fall 45%. We also note that the stock has performed poorly over the last year, with the share price down 25%. Even worse, it's down 24% in about a month, which isn't fun at all. But this could be related to poor market conditions -- stocks are down 13% in the same time.

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

Given that Shenzhen Institute of Building Research only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In the last half decade, Shenzhen Institute of Building Research saw its revenue increase by 3.1% per year. That's not a very high growth rate considering it doesn't make profits. Given the weak growth, the share price fall of 8% isn't particularly surprising. Investors should consider how bad the losses are, and whether the company can make it to profitability with ease. Shareholders will want the company to approach profitability if it can't grow revenue any faster.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Shenzhen Institute of Building Research shareholders are down 25% over twelve months (even including dividends), which isn't far from the market return of -25%. So last year was actually even worse than the last five years, which cost shareholders 8% per year. Weak performance over the long term usually destroys market confidence in a stock, but bargain hunters may want to take a closer look for signs of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Shenzhen Institute of Building Research better, we need to consider many other factors. For instance, we've identified 4 warning signs for Shenzhen Institute of Building Research (2 are significant) that you should be aware of.

For those who like to find winning investments this free list of growing 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.