It's nice to see the Suzhou Jinfu Technology Co., Ltd. (SZSE:300128) share price up 17% in a week. But that is minimal compensation for the share price under-performance over the last year. The cold reality is that the stock has dropped 27% in one year, under-performing the market.
On a more encouraging note the company has added CN¥657m 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.
Suzhou Jinfu Technology 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Suzhou Jinfu Technology grew its revenue by 18% over the last year. We think that is pretty nice growth. Unfortunately that wasn't good enough to stop the share price dropping 27%. You might even wonder if the share price was previously over-hyped. But if revenue keeps growing, then at a certain point the share price would likely follow.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling Suzhou Jinfu Technology stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We regret to report that Suzhou Jinfu Technology shareholders are down 27% 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2% over the last half decade. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Suzhou Jinfu Technology , and understanding them should be part of your investment process.
But note: Suzhou Jinfu Technology may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com