Jiangxi Black Cat Carbon BlackLtd (SZSE:002068) dips 9.9% this week as increasing losses might not be inspiring confidence among its investors

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. For example, the Jiangxi Black Cat Carbon Black Inc.,Ltd (SZSE:002068) share price is down 42% in the last year. That contrasts poorly with the market decline of 17%. However, the longer term returns haven't been so bad, with the stock down 8.5% in the last three years. Furthermore, it's down 28% in about a quarter. That's not much fun for holders.

Since Jiangxi Black Cat Carbon BlackLtd has shed CN¥563m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Jiangxi Black Cat Carbon BlackLtd

Jiangxi Black Cat Carbon BlackLtd isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Jiangxi Black Cat Carbon BlackLtd's revenue didn't grow at all in the last year. In fact, it fell 6.1%. That looks pretty grim, at a glance. The stock price has languished lately, falling 42% in a year. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

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 Jiangxi Black Cat Carbon BlackLtd stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market lost about 17% in the twelve months, Jiangxi Black Cat Carbon BlackLtd shareholders did even worse, losing 42%. 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. On the bright side, long term shareholders have made money, with a gain of 6% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Jiangxi Black Cat Carbon BlackLtd better, we need to consider many other factors. Take risks, for example - Jiangxi Black Cat Carbon BlackLtd has 1 warning sign we think you should be aware of.

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.

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