No-one enjoys it when they lose money on a stock. But it can difficult to make money in a declining market. Over three years the Yunnan Tourism Co., Ltd. (SZSE:002059) share price fell 11%. On the bright side, that's better than the market decline of 14%. The last week also saw the share price slip down another 8.5%.

Since Yunnan Tourism has shed CN¥506m 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 Yunnan Tourism 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years, Yunnan Tourism's revenue dropped 38% per year. That means its revenue trend is very weak compared to other loss making companies. Revenue is dropping off fast, and so too is revenue, which is down 4% per year in that time. That makes us wonder whether the stock may be overvalued, but either way it is worth checking the balance sheet if you're thinking of investing.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

Yunnan Tourism shareholders are down 2.0% for the year, but the market itself is up 13%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 0.9% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Even so, be aware that Yunnan Tourism is showing 1 warning sign in our investment analysis , you should know about...

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.