It's normal to be annoyed when stock you own has a declining share price. But sometimes broader market conditions have more of an impact on prices than the actual business performance. The Shenzhen AOTO Electronics Co., Ltd. (SZSE:002587) is down 25% over a year, but the total shareholder return is -24% once you include the dividend. That's better than the market which declined 26% over the last year. On the bright side, the stock is actually up 17% in the last three years. It's down 32% in about a month.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Given that Shenzhen AOTO Electronics only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In just one year Shenzhen AOTO Electronics saw its revenue fall by 27%. That looks pretty grim, at a glance. The stock is down just 25% over twelve months, which is not bad all things considered. So it seems that the market saw the weak revenue coming, and isn't worried. It could be interesting to study this stock more closely - when will it generate profits?

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

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

A Different Perspective

The total return of 24% received by Shenzhen AOTO Electronics shareholders over the last year isn't far from the market return of -26%. Longer term investors wouldn't be so upset, since they would have made 1.6%, each year, over five years. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. It's always interesting to track share price performance over the longer term. But to understand Shenzhen AOTO Electronics better, we need to consider many other factors. Take risks, for example - Shenzhen AOTO Electronics has 4 warning signs (and 1 which is concerning) we think you should know about.

We will like Shenzhen AOTO Electronics better if we see some big insider buys. While we wait, check out this free list of growing companies 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.