By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. Just take a look at Shang Hai Ya Tong Co.,Ltd. (SHSE:600692), which is up 22%, over three years, soundly beating the market decline of 31% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 8.6% in the last year.

Since it's been a strong week for Shang Hai Ya TongLtd shareholders, let's have a look at trend of the longer term fundamentals.

While Shang Hai Ya TongLtd 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.

Shang Hai Ya TongLtd actually saw its revenue drop by 4.3% per year over three years. Despite the lack of revenue growth, the stock has returned 7%, compound, over three years. Unless the company is going to make profits soon, we would be pretty cautious about it.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling Shang Hai Ya TongLtd stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that Shang Hai Ya TongLtd shareholders have received a total shareholder return of 8.6% over one year. That gain is better than the annual TSR over five years, which is 0.6%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Shang Hai Ya TongLtd you should be aware of, and 2 of them are significant.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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