The nature of investing is that you win some, and you lose some. Unfortunately, shareholders of Jiangsu Hagong Intelligent Robot Co., Ltd (SZSE:000584) have suffered share price declines over the last year. In that relatively short period, the share price has plunged 61%. To make matters worse, the returns over three years have also been really disappointing (the share price is 50% lower than three years ago). Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days.
Since Jiangsu Hagong Intelligent Robot has shed CN¥396m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for Jiangsu Hagong Intelligent Robot
Given that Jiangsu Hagong Intelligent Robot didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last year Jiangsu Hagong Intelligent Robot saw its revenue grow by 45%. That's definitely a respectable growth rate. Meanwhile, the share price tanked 61%, suggesting the market had much higher expectations. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
We regret to report that Jiangsu Hagong Intelligent Robot shareholders are down 61% for the year. Unfortunately, that's worse than the broader market decline of 21%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% 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. It's always interesting to track share price performance over the longer term. But to understand Jiangsu Hagong Intelligent Robot better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Jiangsu Hagong Intelligent Robot you should be aware of.
For those who like to find winning investments this free list of growing 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.