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. For example, the Shanghai Feilo Acoustics Co.,Ltd (SHSE:600651) share price is up 22% in the last three years, clearly besting the market decline of around 18% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 4.6% in the last year.

The past week has proven to be lucrative for Shanghai Feilo AcousticsLtd investors, so let's see if fundamentals drove the company's three-year performance.

While Shanghai Feilo AcousticsLtd 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.

In the last 3 years Shanghai Feilo AcousticsLtd saw its revenue shrink by 30% per year. The revenue growth might be lacking but the share price has gained 7% each year in that time. Unless the company is going to make profits soon, we would be pretty cautious about it.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

If you are thinking of buying or selling Shanghai Feilo AcousticsLtd stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Shanghai Feilo AcousticsLtd shareholders are up 4.6% for the year. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 2% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Shanghai Feilo AcousticsLtd better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Shanghai Feilo AcousticsLtd .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.