Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Ningbo GQY Video & Telecom Joint-Stock Co., Ltd. (SZSE:300076) share price slid 47% over twelve months. That falls noticeably short of the market decline of around 26%. At least the damage isn't so bad if you look at the last three years, since the stock is down 23% in that time. The falls have accelerated recently, with the share price down 42% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 19% in the same timeframe.

Since Ningbo GQY Video & Telecom has shed CN¥649m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Ningbo GQY Video & Telecom 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Ningbo GQY Video & Telecom grew its revenue by 94% over the last year. That's a strong result which is better than most other loss making companies. The share price drop of 47% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized.

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

If you are thinking of buying or selling Ningbo GQY Video & Telecom stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Ningbo GQY Video & Telecom shareholders are down 47% for the year. Unfortunately, that's worse than the broader market decline of 26%. 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 5% 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. 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. To that end, you should be aware of the 2 warning signs we've spotted with Ningbo GQY Video & Telecom .

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.