XiaMen HongXin Electron-tech Group Co.,Ltd (SZSE:300657) shareholders might understandably be very concerned that the share price has dropped 32% in the last quarter. Looking further back, the stock has generated good profits over five years. After all, the share price is up a market-beating 54% in that time.

Since the long term performance has been good but there's been a recent pullback of 7.9%, let's check if the fundamentals match the share price.

See our latest analysis for XiaMen HongXin Electron-tech GroupLtd

Because XiaMen HongXin Electron-tech GroupLtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

For the last half decade, XiaMen HongXin Electron-tech GroupLtd can boast revenue growth at a rate of 6.8% per year. That's a fairly respectable growth rate. While the share price has beat the market, compounding at 9% yearly, over five years, there's certainly some potential that the market hasn't fully considered the growth track record. If revenue growth can maintain for long enough, it's likely profits will flow. Lack of earnings means you have to project further into the future justify the valuation on the basis of future free cash flow.

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 XiaMen HongXin Electron-tech GroupLtd's financial health with this free report on its balance sheet.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between XiaMen HongXin Electron-tech GroupLtd's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. XiaMen HongXin Electron-tech GroupLtd's TSR of 56% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's good to see that XiaMen HongXin Electron-tech GroupLtd has rewarded shareholders with a total shareholder return of 22% in the last twelve months. That's better than the annualised return of 9% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with XiaMen HongXin Electron-tech GroupLtd (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.