For many investors, the main point of stock picking is to generate higher returns than the overall market. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term TECON BIOLOGY Co.LTD (SZSE:002100) shareholders have had that experience, with the share price dropping 35% in three years, versus a market decline of about 17%. The falls have accelerated recently, with the share price down 13% in the last three months.

Since TECON BIOLOGYLTD has shed CN¥478m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Given that TECON BIOLOGYLTD 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over three years, TECON BIOLOGYLTD grew revenue at 14% per year. That's a pretty good rate of top-line growth. Shareholders have endured a share price decline of 10% per year. This implies the market had higher expectations of TECON BIOLOGYLTD. With revenue growing at a solid clip, now might be the time to focus on the possibility that it will have a brighter future.

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 TECON BIOLOGYLTD's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of TECON BIOLOGYLTD, it has a TSR of -29% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

TECON BIOLOGYLTD shareholders are down 15% over twelve months (even including dividends), which isn't far from the market return of -16%. So last year was actually even worse than the last five years, which cost shareholders 3% per year. It will probably take a substantial improvement in the fundamental performance for the company to reverse this trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 1 warning sign for TECON BIOLOGYLTD that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.