Shareholders in Sensteed Hi-Tech Group (SZSE:000981) have lost 66%, as stock drops 8.7% this past week

Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. Zooming in on an example, the Sensteed Hi-Tech Group (SZSE:000981) share price dropped 66% in the last half decade. That is extremely sub-optimal, to say the least. And some of the more recent buyers are probably worried, too, with the stock falling 26% in the last year. More recently, the share price has dropped a further 9.9% in a month.

If the past week is anything to go by, investor sentiment for Sensteed Hi-Tech Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Sensteed Hi-Tech Group

Sensteed Hi-Tech Group 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last five years Sensteed Hi-Tech Group saw its revenue shrink by 19% per year. That's definitely a weaker result than most pre-profit companies report. Arguably, the market has responded appropriately to this business performance by sending the share price down 11% (annualized) in the same time period. It's fair to say most investors don't like to invest in loss making companies with falling revenue. This looks like a really risky stock to buy, at a glance.

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

If you are thinking of buying or selling Sensteed Hi-Tech Group stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market lost about 16% in the twelve months, Sensteed Hi-Tech Group shareholders did even worse, losing 26%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% 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. It's always interesting to track share price performance over the longer term. But to understand Sensteed Hi-Tech Group better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Sensteed Hi-Tech Group , and understanding them should be part of your investment process.

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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.