Jiangxi Fushine Pharmaceutical Co., Ltd. (SZSE:300497) shareholders should be happy to see the share price up 20% in the last quarter. If you look at the last three years, the stock price is down. But on the bright side, its return of -22%, is better than the market, which is down 22%.

On a more encouraging note the company has added CN¥431m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

Jiangxi Fushine Pharmaceutical 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 hope to see good 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 three years, Jiangxi Fushine Pharmaceutical saw its revenue grow by 5.2% per year, compound. That's not a very high growth rate considering it doesn't make profits. The share price drop of 7% per year is not too bad. So it seems plausible that the market sentiment has remained optimistic, given the fairly modest revenue growth, and current lack of profits. In this sort of situation it could be worth checking if the company is on the verge of profitability - because that milestone can catch the eye of a new type of investor.

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

If you are thinking of buying or selling Jiangxi Fushine Pharmaceutical stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Jiangxi Fushine Pharmaceutical shareholders are down 21% for the year. Unfortunately, that's worse than the broader market decline of 13%. 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. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Jiangxi Fushine Pharmaceutical better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Jiangxi Fushine Pharmaceutical you should be aware of.

Of course Jiangxi Fushine Pharmaceutical 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.