Shenzhen Sunrise New Energy (SZSE:002256 shareholders incur further losses as stock declines 9.8% this week, taking three-year losses to 30%

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. Unfortunately, that's been the case for longer term Shenzhen Sunrise New Energy Co., Ltd. (SZSE:002256) shareholders, since the share price is down 30% in the last three years, falling well short of the market decline of around 1.0%. The last week also saw the share price slip down another 9.8%.

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

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Shenzhen Sunrise New Energy 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, Shenzhen Sunrise New Energy's revenue dropped 1.6% per year. That's not what investors generally want to see. The annual decline of 9% per year in that period has clearly disappointed holders. And with no profits, and weak revenue, are you surprised? However, in this kind of situation you can sometimes find opportunity, where sentiment is negative but the company is actually making good progress.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

This free interactive report on Shenzhen Sunrise New Energy's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Shenzhen Sunrise New Energy provided a TSR of 1.8% over the last twelve months. But that return falls short of the market. On the bright side, the longer term returns (running at about 4% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. 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 for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Shenzhen Sunrise New Energy , and understanding them should be part of your investment process.

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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.