Xiamen Zhongchuang Environmental Technology (SZSE:300056) shareholders are still up 43% over 5 years despite pulling back 10% in the past week

Xiamen Zhongchuang Environmental Technology Co., Ltd (SZSE:300056) shareholders might be concerned after seeing the share price drop 13% in the last quarter. Looking further back, the stock has generated good profits over five years. It has returned a market beating 43% in that time.

While the stock has fallen 10% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

See our latest analysis for Xiamen Zhongchuang Environmental Technology

Given that Xiamen Zhongchuang Environmental 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. 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.

Over the last half decade Xiamen Zhongchuang Environmental Technology's revenue has actually been trending down at about 14% per year. Despite the lack of revenue growth, the stock has returned a respectable 7%, compound, over that time. It's probably worth checking other factors such as the profitability, to try to understand the share price action. It may not be reflecting the revenue.

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

Take a more thorough look at Xiamen Zhongchuang Environmental Technology's financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Xiamen Zhongchuang Environmental Technology shareholders have received a total shareholder return of 24% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 7% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Xiamen Zhongchuang Environmental Technology better, we need to consider many other factors. Take risks, for example - Xiamen Zhongchuang Environmental Technology has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

Of course Xiamen Zhongchuang Environmental Technology may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com