The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in Guang Dong Qun Xing Toys Joint-Stockco.,Ltd. (SZSE:002575), since the last five years saw the share price fall 36%. Furthermore, it's down 34% in about a quarter. That's not much fun for holders.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
Given that Guang Dong Qun Xing Toys co.Ltd only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. 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 half decade, Guang Dong Qun Xing Toys co.Ltd saw its revenue increase by 18% per year. That's well above most other pre-profit companies. Shareholders are no doubt disappointed with the loss of 6%, each year, in that time. So you might argue the Guang Dong Qun Xing Toys co.Ltd should get more credit for its rather impressive revenue growth over the period. If that's the case, now might be the smart time to take a close look at it.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Guang Dong Qun Xing Toys co.Ltd stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While it's never nice to take a loss, Guang Dong Qun Xing Toys co.Ltd shareholders can take comfort that their trailing twelve month loss of 9.2% wasn't as bad as the market loss of around 12%. Given the total loss of 6% per year over five years, it seems returns have deteriorated in the last twelve months. While some investors do well specializing in buying companies that are struggling (but nonetheless undervalued), don't forget that Buffett said that 'turnarounds seldom turn'. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Guang Dong Qun Xing Toys co.Ltd , and understanding them should be part of your investment process.
But note: Guang Dong Qun Xing Toys co.Ltd 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.