It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. To wit, the Shenzhen Sunrise New Energy Co., Ltd. (SZSE:002256) share price has flown 125% in the last three years. How nice for those who held the stock! And in the last month, the share price has gained 17%.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for Shenzhen Sunrise New Energy

Shenzhen Sunrise New Energy isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 3 years Shenzhen Sunrise New Energy saw its revenue shrink by 13% per year. So we wouldn't have expected the share price to gain 31% per year, but it has. It's a good reminder that expectations about the future, not the past history, always impact share prices.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

If you are thinking of buying or selling Shenzhen Sunrise New Energy stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that Shenzhen Sunrise New Energy shareholders have received a total shareholder return of 2.3% over one year. Notably the five-year annualised TSR loss of 3% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

Of course Shenzhen Sunrise New Energy may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.