Zhejiang Canaan Technology (SZSE:300412) adds CN¥144m to market cap in the past 7 days, though investors from three years ago are still down 43%

It's nice to see the Zhejiang Canaan Technology Limited (SZSE:300412) share price up 10% in a week. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 43% in the last three years, significantly under-performing the market.

On a more encouraging note the company has added CN¥144m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

Check out our latest analysis for Zhejiang Canaan Technology

Zhejiang Canaan Technology isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years Zhejiang Canaan Technology saw its revenue shrink by 1.1% per year. That's not what investors generally want to see. The annual decline of 13% per year in that period has clearly disappointed holders. That makes sense given the lack of either profits or revenue growth. However, in this kind of situation you can sometimes find opportunity, where sentiment is negative but the company is actually making good progress.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

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

A Different Perspective

We regret to report that Zhejiang Canaan Technology shareholders are down 42% for the year. Unfortunately, that's worse than the broader market decline of 19%. 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 1.6% over the last half decade. 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. It's always interesting to track share price performance over the longer term. But to understand Zhejiang Canaan Technology better, we need to consider many other factors. For example, we've discovered 2 warning signs for Zhejiang Canaan Technology (1 shouldn't be ignored!) that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com