Despite shrinking by CN¥550m in the past week, Jiangyin Zhongnan Heavy IndustriesLtd (SZSE:002445) shareholders are still up 58% over 5 years

Jiangyin Zhongnan Heavy Industries Co.,Ltd (SZSE:002445) shareholders have seen the share price descend 12% over the month. On the bright side the returns have been quite good over the last half decade. After all, the share price is up a market-beating 58% in that time.

Since the long term performance has been good but there's been a recent pullback of 9.1%, let's check if the fundamentals match the share price.

See our latest analysis for Jiangyin Zhongnan Heavy IndustriesLtd

While Jiangyin Zhongnan Heavy IndustriesLtd made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. 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.

For the last half decade, Jiangyin Zhongnan Heavy IndustriesLtd can boast revenue growth at a rate of 13% per year. That's a pretty good long term growth rate. Revenue has been growing at a reasonable clip, so it's debatable whether the share price growth of 10% full reflects the underlying business growth. If revenue growth can maintain for long enough, it's likely profits will flow. There's no doubt that it can be difficult to value pre-profit companies.

The graphic below depicts how earnings and revenue have changed over time (unveil 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.

A Different Perspective

Jiangyin Zhongnan Heavy IndustriesLtd shareholders gained a total return of 1.3% during the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 10% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. 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. Even so, be aware that Jiangyin Zhongnan Heavy IndustriesLtd is showing 2 warning signs in our investment analysis , you should know about...

But note: Jiangyin Zhongnan Heavy IndustriesLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.