It is doubtless a positive to see that the Gansu Jiu Steel Group Hongxing Iron & Steel Co.,Ltd. (SHSE:600307) share price has gained some 45% in the last three months. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 18% in the last three years, falling well short of the market return.

Since Gansu Jiu Steel Group Hongxing Iron & SteelLtd has shed CN¥376m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Given that Gansu Jiu Steel Group Hongxing Iron & SteelLtd didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years Gansu Jiu Steel Group Hongxing Iron & SteelLtd saw its revenue shrink by 13% per year. That is not a good result. The annual decline of 6% per year in that period has clearly disappointed holders. And with no profits, and weak revenue, are you surprised? Of course, sentiment could become too negative, and the company may actually be making progress to profitability.

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

Take a more thorough look at Gansu Jiu Steel Group Hongxing Iron & SteelLtd's financial health with this free report on its balance sheet.

A Different Perspective

It's good to see that Gansu Jiu Steel Group Hongxing Iron & SteelLtd has rewarded shareholders with a total shareholder return of 17% in the last twelve months. Notably the five-year annualised TSR loss of 1.7% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. 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 Gansu Jiu Steel Group Hongxing Iron & SteelLtd , and understanding them should be part of your investment process.

But note: Gansu Jiu Steel Group Hongxing Iron & SteelLtd 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.

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.