The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Guizhou Yibai Pharmaceutical Co., Ltd. (SHSE:600594) have had an unfortunate run in the last three years. Unfortunately, they have held through a 58% decline in the share price in that time. And more recent buyers are having a tough time too, with a drop of 39% in the last year. On top of that, the share price is down 16% in the last week.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Guizhou Yibai Pharmaceutical isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, Guizhou Yibai Pharmaceutical's revenue dropped 11% per year. That's not what investors generally want to see. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 16% per year. Of course, it's the future that will determine whether today's price is a good one. We'd be pretty wary of this one until it makes a profit, because we don't specialize in finding turnaround situations.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

If you are thinking of buying or selling Guizhou Yibai Pharmaceutical stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Guizhou Yibai Pharmaceutical shareholders are down 37% for the year (even including dividends), but the market itself is up 10%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Guizhou Yibai Pharmaceutical (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

But note: Guizhou Yibai Pharmaceutical 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.