Xiamen Xindeco Ltd. (SZSE:000701) shareholders should be happy to see the share price up 24% in the last month. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 33% in a year, falling short of the returns you could get by investing in an index fund.

On a more encouraging note the company has added CN¥405m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

Xiamen Xindeco wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In just one year Xiamen Xindeco saw its revenue fall by 31%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 33% in that time. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

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

This free interactive report on Xiamen Xindeco's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that Xiamen Xindeco shareholders are down 33% for the year. Unfortunately, that's worse than the broader market decline of 6.0%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. You could get a better understanding of Xiamen Xindeco's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

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.