Talkweb Information System Co.,Ltd. (SZSE:002261) shareholders might be concerned after seeing the share price drop 18% in the last quarter. On the bright side the returns have been quite good over the last half decade. After all, the share price is up a market-beating 80% in that time. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 38% drop, in the last year.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

While Talkweb Information SystemLtd 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. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

For the last half decade, Talkweb Information SystemLtd can boast revenue growth at a rate of 20% per year. That's well above most pre-profit companies. It's good to see that the stock has 13%, but not entirely surprising given revenue shows strong growth. If you think there could be more growth to come, now might be the time to take a close look at Talkweb Information SystemLtd. Of course, you'll have to research the business more fully to figure out if this is an attractive opportunity.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We know that Talkweb Information SystemLtd has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Talkweb Information SystemLtd

A Different Perspective

We regret to report that Talkweb Information SystemLtd shareholders are down 38% for the year. Unfortunately, that's worse than the broader market decline of 18%. 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. Longer term investors wouldn't be so upset, since they would have made 13%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Talkweb Information SystemLtd better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Talkweb Information SystemLtd you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.