If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. To wit, the ShanXi C&Y Pharmaceutical Group Co., Ltd. (SZSE:300254) share price is 54% higher than it was a year ago, much better than the market decline of around 0.9% (not including dividends) in the same period. So that should have shareholders smiling. Having said that, the longer term returns aren't so impressive, with stock gaining just 23% in three years.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
See our latest analysis for ShanXi C&Y Pharmaceutical Group
Because ShanXi C&Y Pharmaceutical Group made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
ShanXi C&Y Pharmaceutical Group actually shrunk its revenue over the last year, with a reduction of 9.4%. Despite the lack of revenue growth, the stock has returned a solid 54% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at ShanXi C&Y Pharmaceutical Group's financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that ShanXi C&Y Pharmaceutical Group shareholders have received a total shareholder return of 54% over the last year. That's better than the annualised return of 9% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand ShanXi C&Y Pharmaceutical Group better, we need to consider many other factors. Even so, be aware that ShanXi C&Y Pharmaceutical Group is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...
But note: ShanXi C&Y Pharmaceutical Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.