Further weakness as Thinker Agricultural Machinery (SHSE:603789) drops 14% this week, taking five-year losses to 50%

We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. To wit, the Thinker Agricultural Machinery Co., Ltd. (SHSE:603789) share price managed to fall 50% over five long years. We certainly feel for shareholders who bought near the top. And we doubt long term believers are the only worried holders, since the stock price has declined 33% over the last twelve months. Shareholders have had an even rougher run lately, with the share price down 17% in the last 90 days.

With the stock having lost 14% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

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Thinker Agricultural Machinery isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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 half a decade Thinker Agricultural Machinery reduced its trailing twelve month revenue by 19% for each year. That puts it in an unattractive cohort, to put it mildly. It seems appropriate, then, that the share price slid about 8% annually during that time. 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.

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

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

Thinker Agricultural Machinery shareholders are down 33% for the year, but the market itself is up 14%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8% 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. 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. Case in point: We've spotted 3 warning signs for Thinker Agricultural Machinery you should be aware of.

We will like Thinker Agricultural Machinery 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.