The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. For example, the China Qidian Guofeng Holdings Limited (HKG:1280) share price has soared 284% in the last three years. That sort of return is as solid as granite. It's also up 11% in about a month.

The past week has proven to be lucrative for China Qidian Guofeng Holdings investors, so let's see if fundamentals drove the company's three-year performance.

China Qidian Guofeng Holdings 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

China Qidian Guofeng Holdings actually saw its revenue drop by 1.3% per year over three years. So the share price gain of 57% per year is quite surprising. It's a good reminder that expectations about the future, not the past history, always impact share prices.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. It might be well worthwhile taking a look at our free report on China Qidian Guofeng Holdings' earnings, revenue and cash flow.

A Different Perspective

It's good to see that China Qidian Guofeng Holdings has rewarded shareholders with a total shareholder return of 37% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 1.0% per year over five years. 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. To that end, you should be aware of the 2 warning signs we've spotted with China Qidian Guofeng Holdings .

China Qidian Guofeng Holdings is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong 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.