Shenzhen Increase Technology (SZSE:300713 shareholders incur further losses as stock declines 12% this week, taking one-year losses to 59%

Investing in stocks comes with the risk that the share price will fall. And there's no doubt that Shenzhen Increase Technology Co., Ltd. (SZSE:300713) stock has had a really bad year. To wit the share price is down 59% in that time. Even if you look out three years, the returns are still disappointing, with the share price down41% in that time. The falls have accelerated recently, with the share price down 24% in the last three months.

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

Check out our latest analysis for Shenzhen Increase Technology

Shenzhen Increase Technology wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Shenzhen Increase Technology's revenue didn't grow at all in the last year. In fact, it fell 23%. That looks pretty grim, at a glance. In the absence of profits, it's not unreasonable that the share price fell 59%. Having said that, if growth is coming in the future, the stock may have better days ahead. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.

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

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

A Different Perspective

While the broader market lost about 12% in the twelve months, Shenzhen Increase Technology shareholders did even worse, losing 59%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for Shenzhen Increase Technology (1 is potentially serious) that you should be aware of.

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.