The one-year earnings decline is not helping Jouder Precision Industry (Kunshan)'s (SZSE:300549 share price, as stock falls another 13% in past week

Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Jouder Precision Industry (Kunshan) Co., Ltd. (SZSE:300549) have tasted that bitter downside in the last year, as the share price dropped 19%. That's well below the market return of 7.2%. At least the damage isn't so bad if you look at the last three years, since the stock is down 13% in that time. Unfortunately the last month hasn't been any better, with the share price down 24%.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

View our latest analysis for Jouder Precision Industry (Kunshan)

Given that Jouder Precision Industry (Kunshan) only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Jouder Precision Industry (Kunshan)'s revenue didn't grow at all in the last year. In fact, it fell 9.3%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 19% in that time. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

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

This free interactive report on Jouder Precision Industry (Kunshan)'s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Jouder Precision Industry (Kunshan) shareholders are down 18% for the year (even including dividends), but the market itself is up 7.2%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 2% 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. To that end, you should learn about the 4 warning signs we've spotted with Jouder Precision Industry (Kunshan) (including 1 which shouldn't be ignored) .

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.