Shareholders in Nanjing Chervon Auto Precision Technology (SHSE:603982) have lost 71%, as stock drops 12% this past week

We're definitely into long term investing, but some companies are simply bad investments over any time frame. It hits us in the gut when we see fellow investors suffer a loss. Spare a thought for those who held Nanjing Chervon Auto Precision Technology Co., Ltd (SHSE:603982) for five whole years - as the share price tanked 71%. And some of the more recent buyers are probably worried, too, with the stock falling 46% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 22% in thirty days.

Since Nanjing Chervon Auto Precision Technology has shed CN¥277m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

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. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last half decade, Nanjing Chervon Auto Precision Technology saw its revenue increase by 12% per year. That's a fairly respectable growth rate. So the stock price fall of 11% per year seems pretty steep. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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 lost about 10% in the twelve months, Nanjing Chervon Auto Precision Technology shareholders did even worse, losing 46%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. 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. To that end, you should be aware of the 2 warning signs we've spotted with Nanjing Chervon Auto Precision Technology .

We will like Nanjing Chervon Auto Precision Technology better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider 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.