Shareholders in Nanjing Chervon Auto Precision Technology (SHSE:603982) have lost 81%, as stock drops 13% this past week

Nanjing Chervon Auto Precision Technology Co., Ltd (SHSE:603982) shareholders should be happy to see the share price up 17% in the last quarter. But that doesn't change the fact that the returns over the last three years have been stomach churning. Indeed, the share price is down a whopping 82% in the last three years. So it's about time shareholders saw some gains. Only time will tell if the company can sustain the turnaround. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

If the past week is anything to go by, investor sentiment for Nanjing Chervon Auto Precision Technology isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Nanjing Chervon Auto Precision Technology

Nanjing Chervon Auto Precision Technology 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years, Nanjing Chervon Auto Precision Technology saw its revenue grow by 13% per year, compound. That's a fairly respectable growth rate. So it's hard to believe the share price decline of 22% per year is due to the revenue. It could be that the losses were much larger than expected. This is exactly why investors need to diversify - even when a loss making company grows revenue, it can fail to deliver for shareholders.

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

Take a more thorough look at Nanjing Chervon Auto Precision Technology's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market gained around 14% in the last year, Nanjing Chervon Auto Precision Technology shareholders lost 40%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Nanjing Chervon Auto Precision Technology better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Nanjing Chervon Auto Precision Technology .

But note: Nanjing Chervon Auto Precision Technology 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.