It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by Jiangxi Black Cat Carbon Black Inc.,Ltd (SZSE:002068) shareholders over the last year, as the share price declined 44%. That contrasts poorly with the market decline of 14%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 20% in three years. The falls have accelerated recently, with the share price down 20% in the last three months.

While the stock has risen 9.7% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Jiangxi Black Cat Carbon BlackLtd isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Jiangxi Black Cat Carbon BlackLtd grew its revenue by 2.9% over the last year. While that may seem decent it isn't great considering the company is still making a loss. Given this lacklustre revenue growth, the share price drop of 44% seems pretty appropriate. It's important not to lose sight of the fact that profitless companies must grow. But if you buy a loss making company then you could become a loss making investor.

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

Take a more thorough look at Jiangxi Black Cat Carbon BlackLtd's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that Jiangxi Black Cat Carbon BlackLtd shareholders are down 44% for the year. Unfortunately, that's worse than the broader market decline of 14%. 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. Longer term investors wouldn't be so upset, since they would have made 4%, 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 Jiangxi Black Cat Carbon BlackLtd better, we need to consider many other factors. For example, we've discovered 1 warning sign for Jiangxi Black Cat Carbon BlackLtd that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.