Xinjiang Hejin HoldingLtd (SZSE:000633) sheds CN¥335m, company earnings and investor returns have been trending downwards for past year

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Xinjiang Hejin Holding Co.,Ltd (SZSE:000633) share price slid 31% over twelve months. That's disappointing when you consider the market returned 12%. However, the longer term returns haven't been so bad, with the stock down 22% in the last three years. And the share price decline continued over the last week, dropping some 15%.

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

Check out our latest analysis for Xinjiang Hejin HoldingLtd

Given that Xinjiang Hejin HoldingLtd only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. 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.

In just one year Xinjiang Hejin HoldingLtd saw its revenue fall by 17%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 31% in that time. What would you expect when revenue is falling, and it doesn't make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

If you are thinking of buying or selling Xinjiang Hejin HoldingLtd stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Xinjiang Hejin HoldingLtd shareholders are down 31% for the year, but the market itself is up 12%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

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.