Optimism around Jiangsu Apon Medical Technology (SZSE:300753) delivering new earnings growth may be shrinking as stock declines 12% this past week

While it may not be enough for some shareholders, we think it is good to see the Jiangsu Apon Medical Technology Co., Ltd. (SZSE:300753) share price up 29% in a single quarter. But over the last half decade, the stock has not performed well. You would have done a lot better buying an index fund, since the stock has dropped 34% in that half decade.

Since Jiangsu Apon Medical Technology has shed CN¥303m 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 Jiangsu Apon Medical Technology

While Jiangsu Apon Medical Technology made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over five years, Jiangsu Apon Medical Technology grew its revenue at 0.07% per year. That's not a very high growth rate considering it doesn't make profits. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 6% (annualized) in the same time frame. The key question is whether the company can make it to profitability, and beyond, without trouble. Shareholders will want the company to approach profitability if it can't grow revenue any faster.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Jiangsu Apon Medical Technology shareholders gained a total return of 2.3% during the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 6% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Jiangsu Apon Medical Technology better, we need to consider many other factors. Take risks, for example - Jiangsu Apon Medical Technology has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about.

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.