Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of Focused Photonics (Hangzhou), Inc. (SZSE:300203) have suffered share price declines over the last year. To wit the share price is down 58% in that time. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 14% in three years. Shareholders have had an even rougher run lately, with the share price down 31% in the last 90 days.
On a more encouraging note the company has added CN¥408m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.
Focused Photonics (Hangzhou) 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Focused Photonics (Hangzhou)'s revenue didn't grow at all in the last year. In fact, it fell 13%. That looks pretty grim, at a glance. In the absence of profits, it's not unreasonable that the share price fell 58%. Fingers crossed this is the low ebb for the stock. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.
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 Focused Photonics (Hangzhou)'s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We regret to report that Focused Photonics (Hangzhou) shareholders are down 58% for the year. Unfortunately, that's worse than the broader market decline of 19%. 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 9% 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 Focused Photonics (Hangzhou) better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Focused Photonics (Hangzhou) (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
