Hubei Biocause Pharmaceutical (SZSE:000627 investor five-year losses grow to 51% as the stock sheds CN¥2.0b this past week

It is a pleasure to report that the Hubei Biocause Pharmaceutical Co., Ltd. (SZSE:000627) is up 91% in the last quarter. But don't envy holders -- looking back over 5 years the returns have been really bad. Indeed, the share price is down 53% in the period. So is the recent increase sufficient to restore confidence in the stock? Not yet. We'd err towards caution given the long term under-performance.

If the past week is anything to go by, investor sentiment for Hubei Biocause Pharmaceutical isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Hubei Biocause Pharmaceutical

Because Hubei Biocause Pharmaceutical made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.

Over five years, Hubei Biocause Pharmaceutical grew its revenue at 3.0% per year. That's far from impressive given all the money it is losing. It's likely this weak growth has contributed to an annualised return of 9% for the last five years. We'd want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in Hubei Biocause Pharmaceutical. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term).

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What About The Total Shareholder Return (TSR)?

We've already covered Hubei Biocause Pharmaceutical's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Hubei Biocause Pharmaceutical's TSR, which was a 51% drop over the last 5 years, was not as bad as the share price return.

A Different Perspective

We're pleased to report that Hubei Biocause Pharmaceutical shareholders have received a total shareholder return of 4.8% over one year. That certainly beats the loss of about 9% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Hubei Biocause Pharmaceutical better, we need to consider many other factors. For example, we've discovered 2 warning signs for Hubei Biocause Pharmaceutical that you should be aware of before investing here.

But note: Hubei Biocause Pharmaceutical 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.