CECEP Environmental Protection Co., Ltd. (SZSE:300140) shareholders might be concerned after seeing the share price drop 15% in the last quarter. But over three years, the returns would have left most investors smiling After all, the share price is up a market-beating 46% in that time.

While the stock has fallen 6.5% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

Given that CECEP Environmental Protection didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

CECEP Environmental Protection actually saw its revenue drop by 8.6% per year over three years. The revenue growth might be lacking but the share price has gained 14% each year in that time. Unless the company is going to make profits soon, we would be pretty cautious about it.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on CECEP Environmental Protection's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While it's never nice to take a loss, CECEP Environmental Protection shareholders can take comfort that their trailing twelve month loss of 19% wasn't as bad as the market loss of around 23%. Unfortunately, last year's performance may indicate unresolved challenges, given that it's worse than the annualised loss of 5% over the last half decade. While some investors do well specializing in buying companies that are struggling (but nonetheless undervalued), don't forget that Buffett said that 'turnarounds seldom turn'. It's always interesting to track share price performance over the longer term. But to understand CECEP Environmental Protection better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for CECEP Environmental Protection you should know about.

Of course CECEP Environmental Protection may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.