It is doubtless a positive to see that the Zhejiang Tony Electronic Co., Ltd (SHSE:603595) share price has gained some 32% in the last three months. But that is small recompense for the exasperating returns over three years. In that time, the share price dropped 51%. So the improvement may be a real relief to some. After all, could be that the fall was overdone.

While the stock has risen 8.8% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Zhejiang Tony Electronic 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years, Zhejiang Tony Electronic saw its revenue grow by 11% per year, compound. That's a pretty good rate of top-line growth. So some shareholders would be frustrated with the compound loss of 15% per year. The market must have had really high expectations to be disappointed with this progress. It would be well worth taking a closer look at the company, to determine growth trends (and balance sheet strength).

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Take a more thorough look at Zhejiang Tony Electronic's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market gained around 11% in the last year, Zhejiang Tony Electronic shareholders lost 48%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. 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. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Zhejiang Tony Electronic you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.