Despite shrinking by CN¥426m in the past week, Miracle Automation EngineeringLtd (SZSE:002009) shareholders are still up 42% over 5 years

Miracle Automation Engineering Co.Ltd (SZSE:002009) shareholders might be concerned after seeing the share price drop 22% in the last quarter. Looking further back, the stock has generated good profits over five years. Its return of 40% has certainly bested the market return!

Since the long term performance has been good but there's been a recent pullback of 8.2%, let's check if the fundamentals match the share price.

See our latest analysis for Miracle Automation EngineeringLtd

Because Miracle Automation EngineeringLtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.

In the last 5 years Miracle Automation EngineeringLtd saw its revenue grow at 4.6% per year. That's not a very high growth rate considering the bottom line. While it's hard to say just how much value the company added over five years, the annualised share price gain of 7% seems about right. The business could be one worth watching but we generally prefer faster revenue growth.

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

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. If you are thinking of buying or selling Miracle Automation EngineeringLtd stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

While the broader market lost about 12% in the twelve months, Miracle Automation EngineeringLtd shareholders did even worse, losing 15%. 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. On the bright side, long term shareholders have made money, with a gain of 7% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. For example, we've discovered 3 warning signs for Miracle Automation EngineeringLtd (1 shouldn't be ignored!) that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.