Further weakness as Shanxi Huayang New MaterialLtd (SHSE:600281) drops 13% this week, taking three-year losses to 39%

While not a mind-blowing move, it is good to see that the Shanxi Huayang New Material Co.,Ltd. (SHSE:600281) share price has gained 27% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 39% in the last three years, falling well short of the market return.

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

Check out our latest analysis for Shanxi Huayang New MaterialLtd

Because Shanxi Huayang New MaterialLtd 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years Shanxi Huayang New MaterialLtd saw its revenue shrink by 6.9% per year. That's not what investors generally want to see. The annual decline of 12% per year in that period has clearly disappointed holders. And with no profits, and weak revenue, are you surprised? Of course, sentiment could become too negative, and the company may actually be making progress to profitability.

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

If you are thinking of buying or selling Shanxi Huayang New MaterialLtd stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market gained around 14% in the last year, Shanxi Huayang New MaterialLtd shareholders lost 20%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 1.7% 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. 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 2 warning signs for Shanxi Huayang New MaterialLtd that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.