Earnings are growing at Jonjee Hi-Tech Industrial and Commercial HoldingLtd (SHSE:600872) but shareholders still don't like its prospects

We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example the Jonjee Hi-Tech Industrial and Commercial Holding Co.,Ltd (SHSE:600872) share price dropped 59% over five years. That's not a lot of fun for true believers. And it's not just long term holders hurting, because the stock is down 47% in the last year. The falls have accelerated recently, with the share price down 36% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

Since Jonjee Hi-Tech Industrial and Commercial HoldingLtd has shed CN¥421m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Jonjee Hi-Tech Industrial and Commercial HoldingLtd

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Jonjee Hi-Tech Industrial and Commercial HoldingLtd became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

In contrast to the share price, revenue has actually increased by 3.2% a year in the five year period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.

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

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. So it makes a lot of sense to check out what analysts think Jonjee Hi-Tech Industrial and Commercial HoldingLtd will earn in the future (free profit forecasts).

A Different Perspective

While the broader market lost about 16% in the twelve months, Jonjee Hi-Tech Industrial and Commercial HoldingLtd shareholders did even worse, losing 46% (even including dividends). 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 3 warning signs for Jonjee Hi-Tech Industrial and Commercial HoldingLtd (2 are concerning!) that you should be aware of before investing here.

Of course Jonjee Hi-Tech Industrial and Commercial HoldingLtd 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.