In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. 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 Guangzhou Pearl River Development Group Co., Ltd. (SHSE:600684) shareholders have had that experience, with the share price dropping 35% in three years, versus a market decline of about 21%. On top of that, the share price is down 15% in the last week.

After losing 15% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Guangzhou Pearl River Development Group wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good 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, Guangzhou Pearl River Development Group grew revenue at 12% per year. That's a fairly respectable growth rate. Shareholders have endured a share price decline of 11% per year. This implies the market had higher expectations of Guangzhou Pearl River Development Group. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

If you are thinking of buying or selling Guangzhou Pearl River Development Group stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market lost about 9.7% in the twelve months, Guangzhou Pearl River Development Group shareholders did even worse, losing 15%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Guangzhou Pearl River Development Group better, we need to consider many other factors. For instance, we've identified 1 warning sign for Guangzhou Pearl River Development Group that you should be aware of.

We will like Guangzhou Pearl River Development Group better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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.