Sai MicroElectronics Inc. (SZSE:300456) shareholders should be happy to see the share price up 17% in the last week. But that doesn't change the fact that the returns over the last three years have been disappointing. Regrettably, the share price slid 53% in that period. So it is really good to see an improvement. The rise has some hopeful, but turnarounds are often precarious.

While the last three years has been tough for Sai MicroElectronics shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Given that Sai MicroElectronics only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over three years, Sai MicroElectronics grew revenue at 15% per year. That's a pretty good rate of top-line growth. That contrasts with the weak share price, which has fallen 15% compounded, over three years. To be frank we're surprised to see revenue growth and share price growth diverge so strongly. It would be well worth taking a closer look at the company, to determine growth trends (and balance sheet strength).

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

We know that Sai MicroElectronics has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Sai MicroElectronics will earn in the future (free profit forecasts).

A Different Perspective

While it's never nice to take a loss, Sai MicroElectronics shareholders can take comfort that , including dividends,their trailing twelve month loss of 14% wasn't as bad as the market loss of around 16%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 6% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Sai MicroElectronics better, we need to consider many other factors. For example, we've discovered 1 warning sign for Sai MicroElectronics that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.