Shareholders in ZHEJIANG NARADA POWER SOURCE (SZSE:300068) have lost 52%, as stock drops 6.0% this past week

Investing in stocks comes with the risk that the share price will fall. Anyone who held ZHEJIANG NARADA POWER SOURCE Co. , Ltd. (SZSE:300068) over the last year knows what a loser feels like. In that relatively short period, the share price has plunged 52%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 18% in three years. Shareholders have had an even rougher run lately, with the share price down 27% in the last 90 days.

After losing 6.0% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Check out our latest analysis for ZHEJIANG NARADA POWER SOURCE

We don't think that ZHEJIANG NARADA POWER SOURCE's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last year ZHEJIANG NARADA POWER SOURCE saw its revenue grow by 3.1%. That's not a very high growth rate considering it doesn't make profits. Without profits, and with revenue growth sluggish, you get a 52% loss for shareholders, over the year. Like many holders, we really want to see better revenue growth in companies that lose money. When a stock falls hard like this, it can signal an over-reaction. Our preference is to wait for a fundamental improvements before buying, but now could be a good time for some research.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

It is of course excellent to see how ZHEJIANG NARADA POWER SOURCE has grown profits over the years, but the future is more important for shareholders. This free interactive report on ZHEJIANG NARADA POWER SOURCE's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that ZHEJIANG NARADA POWER SOURCE shareholders are down 52% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 13%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% 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. It's always interesting to track share price performance over the longer term. But to understand ZHEJIANG NARADA POWER SOURCE better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for ZHEJIANG NARADA POWER SOURCE you should be aware of, and 2 of them are concerning.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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