Further weakness as Kunming Yunnei PowerLtd (SZSE:000903) drops 13% this week, taking three-year losses to 51%

Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term Kunming Yunnei Power Co.,Ltd. (SZSE:000903) shareholders. Unfortunately, they have held through a 52% decline in the share price in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 22% lower in that time. More recently, the share price has dropped a further 20% in a month.

If the past week is anything to go by, investor sentiment for Kunming Yunnei PowerLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Kunming Yunnei PowerLtd

Kunming Yunnei PowerLtd 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. 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.

In the last three years Kunming Yunnei PowerLtd saw its revenue shrink by 31% per year. That's definitely a weaker result than most pre-profit companies report. With no profits and falling revenue it is no surprise that investors have been dumping the stock, pushing the price down by 15% per year over that time. When revenue is dropping, and losses are still costing, and the share price sinking fast, it's fair to ask if something is remiss. After losing money on a declining business with falling stock price, we always consider whether eager bagholders are still offering us a reasonable exit price.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Kunming Yunnei PowerLtd's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Kunming Yunnei PowerLtd shareholders are down 22% for the year. Unfortunately, that's worse than the broader market decline of 10%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Even so, be aware that Kunming Yunnei PowerLtd is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...

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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.