While shareholders of Dongguan Chitwing Technology (SZSE:002855) are in the black over 3 years, those who bought a week ago aren't so fortunate

It hasn't been the best quarter for Dongguan Chitwing Technology Co., Ltd. (SZSE:002855) shareholders, since the share price has fallen 24% in that time. But in three years the returns have been great. In fact, the share price is up a full 137% compared to three years ago. After a run like that some may not be surprised to see prices moderate. Only time will tell if there is still too much optimism currently reflected in the share price.

Since the long term performance has been good but there's been a recent pullback of 6.4%, let's check if the fundamentals match the share price.

Check out our latest analysis for Dongguan Chitwing Technology

Because Dongguan Chitwing Technology 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. 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.

Dongguan Chitwing Technology actually saw its revenue drop by 21% per year over three years. So we wouldn't have expected the share price to gain 33% per year, but it has. It's a good reminder that expectations about the future, not the past history, always impact share prices.

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

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

It's good to see that Dongguan Chitwing Technology has rewarded shareholders with a total shareholder return of 120% in the last twelve months. That gain is better than the annual TSR over five years, which is 18%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Take risks, for example - Dongguan Chitwing Technology has 1 warning sign we think you should be aware of.

But note: Dongguan Chitwing Technology may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.