Generally speaking long term investing is the way to go. But no-one is immune from buying too high. For example the Yang Guang Co.,Ltd. (SZSE:000608) share price dropped 53% over five years. That is extremely sub-optimal, to say the least. And we doubt long term believers are the only worried holders, since the stock price has declined 26% over the last twelve months. And the share price decline continued over the last week, dropping some 27%.

After losing 27% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Given that Yang GuangLtd 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last half decade, Yang GuangLtd saw its revenue increase by 13% per year. That's a fairly respectable growth rate. The share price, meanwhile, has fallen 9% compounded, over five years. It seems probably that the business has failed to live up to initial expectations. A pessimistic market can create opportunities.

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 Yang GuangLtd's financial health with this free report on its balance sheet.

A Different Perspective

The total return of 26% received by Yang GuangLtd shareholders over the last year isn't far from the market return of -25%. So last year was actually even worse than the last five years, which cost shareholders 9% per year. It will probably take a substantial improvement in the fundamental performance for the company to reverse this trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for Yang GuangLtd (1 is a bit unpleasant) that you should be aware of.

Of course Yang GuangLtd 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.