We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example the Realcan Pharmaceutical Group Co., Ltd. (SZSE:002589) share price dropped 60% over five years. That's not a lot of fun for true believers. And it's not just long term holders hurting, because the stock is down 38% in the last year. The falls have accelerated recently, with the share price down 27% in the last three months. Of course, this share price action may well have been influenced by the 14% decline in the broader market, throughout the period.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Because Realcan Pharmaceutical Group 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over half a decade Realcan Pharmaceutical Group reduced its trailing twelve month revenue by 24% for each year. That puts it in an unattractive cohort, to put it mildly. It seems appropriate, then, that the share price slid about 10% annually during that time. We don't generally like to own companies that lose money and don't grow revenues. You might be better off spending your money on a leisure activity. You'd want to research this company pretty thoroughly before buying, it looks a bit too risky for us.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Realcan Pharmaceutical Group's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 24% in the twelve months, Realcan Pharmaceutical Group shareholders did even worse, losing 38%. 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 10% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Realcan Pharmaceutical Group better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Realcan Pharmaceutical Group you should be aware of.

Of course Realcan Pharmaceutical Group 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.