Optimism for Xi'an ChenXi Aviation Technology (SZSE:300581) has grown this past week, despite five-year decline in earnings

The last three months have been tough on Xi'an ChenXi Aviation Technology Corp., Ltd. (SZSE:300581) shareholders, who have seen the share price decline a rather worrying 35%. But that doesn't change the fact that the returns over the last five years have been very strong. It's fair to say most would be happy with 106% the gain in that time. To some, the recent pullback wouldn't be surprising after such a fast rise. Ultimately business performance will determine whether the stock price continues the positive long term trend.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

See our latest analysis for Xi'an ChenXi Aviation Technology

Given that Xi'an ChenXi Aviation Technology 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.

Over the last half decade Xi'an ChenXi Aviation Technology's revenue has actually been trending down at about 4.2% per year. On the other hand, the share price done the opposite, gaining 15%, compound, each year. It's a good reminder that expectations about the future, not the past history, always impact share prices. Still, we are a bit cautious in this kind of situation.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Xi'an ChenXi Aviation Technology's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Xi'an ChenXi Aviation Technology shareholders have received a total shareholder return of 56% over one year. That's including the dividend. That gain is better than the annual TSR over five years, which is 16%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. For example, we've discovered 2 warning signs for Xi'an ChenXi Aviation Technology (1 is concerning!) that you should be aware of before investing here.

But note: Xi'an ChenXi Aviation 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.