Further weakness as Zhuhai Zhongfu EnterpriseLtd (SZSE:000659) drops 10% this week, taking three-year losses to 60%

Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term Zhuhai Zhongfu Enterprise Co.,Ltd (SZSE:000659) shareholders. Regrettably, they have had to cope with a 60% drop in the share price over that period. And over the last year the share price fell 53%, so we doubt many shareholders are delighted. Furthermore, it's down 35% in about a quarter. That's not much fun for holders.

With the stock having lost 10% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Zhuhai Zhongfu EnterpriseLtd

Zhuhai Zhongfu EnterpriseLtd wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.

Over the last three years, Zhuhai Zhongfu EnterpriseLtd's revenue dropped 3.8% per year. That is not a good result. The share price decline of 17% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Of course, it's the future that will determine whether today's price is a good one. We'd be pretty wary of this one until it makes a profit, because we don't specialize in finding turnaround situations.

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

Take a more thorough look at Zhuhai Zhongfu EnterpriseLtd's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that Zhuhai Zhongfu EnterpriseLtd shareholders are down 53% for the year. Unfortunately, that's worse than the broader market decline of 14%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Zhuhai Zhongfu EnterpriseLtd you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.

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