Xinyu Iron & Steel Co., Ltd (SHSE:600782) shareholders will doubtless be very grateful to see the share price up 38% in the last quarter. But that doesn't change the fact that the returns over the last three years haven't been great. To be specific, the share price is a full 15% lower, while the market is down , with a return of (-15%)..

On a more encouraging note the company has added CN¥629m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

Xinyu Iron & Steel 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years Xinyu Iron & Steel saw its revenue shrink by 26% per year. That means its revenue trend is very weak compared to other loss making companies. With revenue in decline, the share price decline of 9% per year is hardly undeserved. It would probably be worth asking whether the company can fund itself to profitability. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.

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 Xinyu Iron & Steel's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Xinyu Iron & Steel's TSR for the last 3 years was -15%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Xinyu Iron & Steel provided a TSR of 12% over the year (including dividends). That's fairly close to the broader market return. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 0.9%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. It's always interesting to track share price performance over the longer term. But to understand Xinyu Iron & Steel better, we need to consider many other factors. Take risks, for example - Xinyu Iron & Steel has 1 warning sign we think you should be aware of.

But note: Xinyu Iron & Steel 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.