Further weakness as Bengang Steel Plates (SZSE:000761) drops 6.2% this week, taking three-year losses to 48%

Many investors define successful investing as beating the market average over the long term. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Bengang Steel Plates Co., Ltd. (SZSE:000761) shareholders have had that experience, with the share price dropping 58% in three years, versus a market decline of about 31%. And the ride hasn't got any smoother in recent times over the last year, with the price 37% lower in that time. Shareholders have had an even rougher run lately, with the share price down 20% in the last 90 days. But this could be related to the weak market, which is down 13% in the same period.

With the stock having lost 6.2% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Bengang Steel Plates

Bengang Steel Plates 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years Bengang Steel Plates saw its revenue shrink by 6.2% per year. That's not what investors generally want to see. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 16% per year. 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.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About The Total Shareholder Return (TSR)?

We've already covered Bengang Steel Plates' share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Bengang Steel Plates' TSR, which was a 48% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

While the broader market lost about 16% in the twelve months, Bengang Steel Plates shareholders did even worse, losing 37%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% 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. It's always interesting to track share price performance over the longer term. But to understand Bengang Steel Plates better, we need to consider many other factors. Even so, be aware that Bengang Steel Plates is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.