One of the frustrations of investing is when a stock goes down. But no-one can make money on every call, especially in a declining market. The Shanghai STEP Electric Corporation (SZSE:002527) is down 22% over three years, but the total shareholder return is -21% once you include the dividend. And that total return actually beats the market decline of 23%. And more recent buyers are having a tough time too, with a drop of 22% in the last year. In the last ninety days we've seen the share price slide 35%.

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

Because Shanghai STEP Electric made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 the last three years, Shanghai STEP Electric's revenue dropped 12% per year. That's not what investors generally want to see. The stock is down just 7% per year over three years, which isn't too bad. The weak broader market would have contributed to the lack of optimism. We'd need to get more comfortable that the company will trend towards profitability, before getting considering a purchase.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Shanghai STEP Electric's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that Shanghai STEP Electric shareholders are down 22% for the year. Unfortunately, that's worse than the broader market decline of 12%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 1.9% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Shanghai STEP Electric better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Shanghai STEP Electric , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.