The 4.5% return this week takes Lifan Technology(Group)Co.Ltd's (SHSE:601777) shareholders five-year gains to 158%

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Lifan Technology(Group)Co.,Ltd. (SHSE:601777) which saw its share price drive 158% higher over five years. On top of that, the share price is up 94% in about a quarter.

Since the stock has added CN¥1.5b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Lifan Technology(Group)Co.Ltd

Given that Lifan Technology(Group)Co.Ltd only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In the last 5 years Lifan Technology(Group)Co.Ltd saw its revenue grow at 8.3% per year. That's a pretty good long term growth rate. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 21% per year over five years. It's well worth monitoring the growth trend in revenue, because if growth accelerates, that might signal an opportunity. When a growth trend accelerates, be it in revenue or earnings, it can indicate an inflection point for the business, which is can often be an opportunity for investors.

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

This free interactive report on Lifan Technology(Group)Co.Ltd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Lifan Technology(Group)Co.Ltd shareholders have received a total shareholder return of 108% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 21% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. For example, we've discovered 3 warning signs for Lifan Technology(Group)Co.Ltd that you should be aware of before investing here.

But note: Lifan Technology(Group)Co.Ltd 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.