Harbin Air ConditioningLtd's (SHSE:600202) one-year decline in earnings translates into losses for shareholders

Harbin Air Conditioning Co.,Ltd. (SHSE:600202) shareholders should be happy to see the share price up 23% in the last month. But that doesn't change the reality of under-performance over the last twelve months. After all, the share price is down 26% in the last year, significantly under-performing the market.

While the stock has risen 19% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Harbin Air ConditioningLtd

While Harbin Air ConditioningLtd made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Harbin Air ConditioningLtd grew its revenue by 5.8% over the last year. That's not a very high growth rate considering it doesn't make profits. Given this lacklustre revenue growth, the share price drop of 26% seems pretty appropriate. It's important not to lose sight of the fact that profitless companies must grow. So remember, if you buy a profitless company then you risk being a profitless investor.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We regret to report that Harbin Air ConditioningLtd shareholders are down 26% for the year. Unfortunately, that's worse than the broader market decline of 6.0%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.6% 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. It's always interesting to track share price performance over the longer term. But to understand Harbin Air ConditioningLtd better, we need to consider many other factors. Take risks, for example - Harbin Air ConditioningLtd has 3 warning signs (and 1 which is significant) we think you should know about.

But note: Harbin Air ConditioningLtd 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.