Shareholders in Xinyu Iron & Steel (SHSE:600782) have lost 22%, as stock drops 4.9% this past week

While it may not be enough for some shareholders, we think it is good to see the Xinyu Iron & Steel Co., Ltd (SHSE:600782) share price up 17% in a single quarter. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 34% in the last three years, falling well short of the market return.

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

Check out our latest analysis for Xinyu Iron & Steel

Xinyu Iron & Steel isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years Xinyu Iron & Steel saw its revenue shrink by 26% per year. That means its revenue trend is very weak compared to other loss making companies. With revenue in decline, the share price decline of 10% per year is hardly undeserved. It would probably be worth asking whether the company can fund itself to profitability. Of course, it is possible for businesses to bounce back from a revenue drop - but we'd want to see that before getting interested.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Xinyu Iron & Steel's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Xinyu Iron & Steel the TSR over the last 3 years was -22%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Xinyu Iron & Steel shareholders gained a total return of 7.0% during the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 2% per year, over five years. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Xinyu Iron & Steel better, we need to consider many other factors. Even so, be aware that Xinyu Iron & Steel is showing 1 warning sign in our investment analysis , you should know about...

But note: Xinyu Iron & Steel 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.

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

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.