By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Jiangsu Yueda Investment Co., Ltd. (SHSE:600805) shareholders have seen the share price rise 30% over three years, well in excess of the market decline (19%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 8.9%.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

While Jiangsu Yueda Investment made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. 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.

Jiangsu Yueda Investment actually saw its revenue drop by 7.3% per year over three years. Despite the lack of revenue growth, the stock has returned 9%, compound, over three years. Unless the company is going to make profits soon, we would be pretty cautious about it.

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

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

A Different Perspective

We're pleased to report that Jiangsu Yueda Investment shareholders have received a total shareholder return of 8.9% over one year. Notably the five-year annualised TSR loss of 5% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Jiangsu Yueda Investment better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Jiangsu Yueda Investment (including 1 which is concerning) .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.