Shanghai Kinetic Medical (SZSE:300326 investor three-year losses grow to 68% as the stock sheds CN¥430m this past week

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Shanghai Kinetic Medical Co., Ltd (SZSE:300326) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 68% drop in the share price over that period. And over the last year the share price fell 39%, so we doubt many shareholders are delighted. Unfortunately the share price momentum is still quite negative, with prices down 20% in thirty days.

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 Shanghai Kinetic Medical

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Shanghai Kinetic Medical became profitable within the last five years. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.

With a rather small yield of just 1.5% we doubt that the stock's share price is based on its dividend. Arguably the revenue decline of 8.9% per year has people thinking Shanghai Kinetic Medical is shrinking. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.

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

We know that Shanghai Kinetic Medical has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Shanghai Kinetic Medical will earn in the future (free profit forecasts).

A Different Perspective

We regret to report that Shanghai Kinetic Medical shareholders are down 39% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 12%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9% 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. It's always interesting to track share price performance over the longer term. But to understand Shanghai Kinetic Medical better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Shanghai Kinetic Medical you should know about.

But note: Shanghai Kinetic Medical 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.