Investors ignore increasing losses at China Aluminum International Engineering (SHSE:601068) as stock jumps 5.3% this past week

By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. Just take a look at China Aluminum International Engineering Corporation Limited (SHSE:601068), which is up 34%, over three years, soundly beating the market decline of 15% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 8.6%.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for China Aluminum International Engineering

China Aluminum International Engineering isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

China Aluminum International Engineering actually saw its revenue drop by 0.9% per year over three years. Despite the lack of revenue growth, the stock has returned 10%, compound, over three years. Unless the company is going to make profits soon, we would be pretty cautious about it.

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

This free interactive report on China Aluminum International Engineering's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

China Aluminum International Engineering provided a TSR of 8.6% over the year. That's fairly close to the broader market return. That gain looks pretty satisfying, and it is even better than the five-year TSR of 0.1% per year. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for China Aluminum International Engineering you should know about.

We will like China Aluminum International Engineering 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.