While not a mind-blowing move, it is good to see that the Kangmei Pharmaceutical Co., Ltd. (SHSE:600518) share price has gained 30% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 49% in the last three years, falling well short of the market return.

With the stock having lost 3.7% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

While Kangmei Pharmaceutical 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. It would be hard to believe in a more profitable future without growing revenues.

Over three years, Kangmei Pharmaceutical grew revenue at 8.8% per year. That's a fairly respectable growth rate. Shareholders have endured a share price decline of 14% per year. This implies the market had higher expectations of Kangmei Pharmaceutical. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

It's nice to see that Kangmei Pharmaceutical shareholders have received a total shareholder return of 22% over the last year. That certainly beats the loss of about 6% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Kangmei Pharmaceutical is showing 1 warning sign in our investment analysis , you should know about...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.