One simple way to benefit from a rising market is to buy an index fund. In contrast individual stocks will provide a wide range of possible returns, and may fall short. One such example is Baoding Tianwei Baobian Electric Co.,Ltd. (SHSE:600550), which saw its share price fall 16% over a year, against a market decline of 14%. At least the damage isn't so bad if you look at the last three years, since the stock is down 1.2% in that time. On the other hand the share price has bounced 8.4% over the last week.

On a more encouraging note the company has added CN¥571m 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.

Baoding Tianwei Baobian ElectricLtd isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last twelve months, Baoding Tianwei Baobian ElectricLtd increased its revenue by 0.5%. While that may seem decent it isn't great considering the company is still making a loss. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 16% in a year. It's important not to lose sight of the fact that profitless companies must grow. So remember, if you buy a profitless company then you risk being a profitless investor.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Baoding Tianwei Baobian ElectricLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 14% in the twelve months, Baoding Tianwei Baobian ElectricLtd shareholders did even worse, losing 16%. 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 1.7% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. You could get a better understanding of Baoding Tianwei Baobian ElectricLtd's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

We will like Baoding Tianwei Baobian ElectricLtd better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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.