The main aim of stock picking is to find the market-beating stocks. But every investor is virtually certain to have both over-performing and under-performing stocks. At this point some shareholders may be questioning their investment in Zhongfu Straits (Pingtan) Development Company Limited (SZSE:000592), since the last five years saw the share price fall 46%. Even worse, it's down 26% in about a month, which isn't fun at all.

On a more encouraging note the company has added CN¥386m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

Zhongfu Straits (Pingtan) Development wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last half decade, Zhongfu Straits (Pingtan) Development saw its revenue increase by 8.2% per year. That's a pretty good rate for a long time period. Shareholders have seen the share price fall at 8% per year, for five years: a poor performance. Clearly, the expectations from back then have not been satisfied. There is always a big risk of losing money yourself when you buy shares in a company that loses money.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on Zhongfu Straits (Pingtan) Development's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

The total return of 18% received by Zhongfu Straits (Pingtan) Development shareholders over the last year isn't far from the market return of -17%. Unfortunately, last year's performance is a deterioration of an already poor long term track record, given the loss of 8% per year over the last five years. Weak performance over the long term usually destroys market confidence in a stock, but bargain hunters may want to take a closer look for signs 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. Case in point: We've spotted 1 warning sign for Zhongfu Straits (Pingtan) Development 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.