One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, the Suzhou Victory Precision Manufacture Co., Ltd. (SZSE:002426) share price is up 24% in the last three years, clearly besting the market decline of around 15% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 6.3% in the last year.
Since the stock has added CN¥688m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
See our latest analysis for Suzhou Victory Precision Manufacture
Suzhou Victory Precision Manufacture isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Suzhou Victory Precision Manufacture actually saw its revenue drop by 40% per year over three years. The revenue growth might be lacking but the share price has gained 7% each year in that time. If the company is cutting costs profitability could be on the horizon, but the revenue decline is a prima facie concern.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Suzhou Victory Precision Manufacture's earnings, revenue and cash flow.
A Different Perspective
We're pleased to report that Suzhou Victory Precision Manufacture shareholders have received a total shareholder return of 6.3% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 0.5% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. You could get a better understanding of Suzhou Victory Precision Manufacture's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
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.