Investors are selling off KraussMaffei (SHSE:600579), lack of profits no doubt contribute to shareholders five-year loss

While not a mind-blowing move, it is good to see that the KraussMaffei Company Limited (SHSE:600579) share price has gained 22% in the last three months. But that doesn't change the fact that the returns over the last five years have been less than pleasing. After all, the share price is down 29% in that time, significantly under-performing the market.

Since KraussMaffei has shed CN¥401m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for KraussMaffei

Given that KraussMaffei didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually desire strong 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.

Over five years, KraussMaffei grew its revenue at 2.2% per year. That's not a very high growth rate considering it doesn't make profits. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 5% (annualized) in the same time frame. Investors should consider how bad the losses are, and whether the company can make it to profitability with ease. Shareholders will want the company to approach profitability if it can't grow revenue any faster.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

If you are thinking of buying or selling KraussMaffei stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

KraussMaffei shareholders are up 11% for the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 5% per year, over five years. It could well be that the business is stabilizing. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for KraussMaffei you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.