Beijing LeiKe Defense Technology (SZSE:002413) shareholders are up 8.6% this past week, but still in the red over the last three years

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But if you try your hand at stock picking, you risk returning less than the market. We regret to report that long term Beijing LeiKe Defense Technology Co., Ltd. (SZSE:002413) shareholders have had that experience, with the share price dropping 39% in three years, versus a market decline of about 29%. And the ride hasn't got any smoother in recent times over the last year, with the price 31% lower in that time. On the other hand the share price has bounced 8.6% over the last week. But this could be related to the strong market, with stocks up around 5.4% in the same time.

While the last three years has been tough for Beijing LeiKe Defense Technology shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Check out our latest analysis for Beijing LeiKe Defense Technology

Given that Beijing LeiKe Defense Technology 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. When a company doesn't make profits, we'd generally hope to see good 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 the last three years, Beijing LeiKe Defense Technology's revenue dropped 9.4% per year. That's not what investors generally want to see. The annual decline of 12% per year in that period has clearly disappointed holders. And with no profits, and weak revenue, are you surprised? Of course, sentiment could become too negative, and the company may actually be making progress to profitability.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

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

A Different Perspective

We regret to report that Beijing LeiKe Defense Technology shareholders are down 31% for the year. Unfortunately, that's worse than the broader market decline of 14%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% 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. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.