If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Shanghai Aerospace Automobile Electromechanical Co., Ltd. (SHSE:600151) have had an unfortunate run in the last three years. So they might be feeling emotional about the 51% share price collapse, in that time. And more recent buyers are having a tough time too, with a drop of 48% in the last year. The falls have accelerated recently, with the share price down 12% in the last three months. But this could be related to the weak market, which is down 6.5% in the same period.

After losing 7.5% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Shanghai Aerospace Automobile Electromechanical 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years, Shanghai Aerospace Automobile Electromechanical saw its revenue grow by 18% per year, compound. That's a fairly respectable growth rate. That contrasts with the weak share price, which has fallen 15% compounded, over three years. The market must have had really high expectations to be disappointed with this progress. It would be well worth taking a closer look at the company, to determine growth trends (and balance sheet strength).

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

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While the broader market lost about 14% in the twelve months, Shanghai Aerospace Automobile Electromechanical shareholders did even worse, losing 48%. 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 3% 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. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

But note: Shanghai Aerospace Automobile Electromechanical may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.

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