Loss-making Hunan New WellfulLtd (SHSE:600975) sheds a further CN¥454m, taking total shareholder losses to 45% over 5 years

Ideally, your overall portfolio should beat the market average. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in Hunan New Wellful Co.,Ltd. (SHSE:600975), since the last five years saw the share price fall 46%. And it's not just long term holders hurting, because the stock is down 30% in the last year. The falls have accelerated recently, with the share price down 38% in the last three months.

Since Hunan New WellfulLtd has shed CN¥454m 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 Hunan New WellfulLtd

Hunan New WellfulLtd 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last half decade, Hunan New WellfulLtd saw its revenue increase by 25% per year. That's better than most loss-making companies. Shareholders are no doubt disappointed with the loss of 8%, each year, in that time. So you might argue the Hunan New WellfulLtd should get more credit for its rather impressive revenue growth over the period. So now is probably an apt time to look closer at the stock, if you think it has potential.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

It's probably worth noting that the CEO is paid less than the median at similar sized 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. This free report showing analyst forecasts should help you form a view on Hunan New WellfulLtd

A Different Perspective

We regret to report that Hunan New WellfulLtd shareholders are down 30% for the year. Unfortunately, that's worse than the broader market decline of 16%. 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 8% 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. 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 example, we've discovered 1 warning sign for Hunan New WellfulLtd that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.