Strong week for Suzhou Chunxing Precision Mechanical (SZSE:002547) shareholders doesn't alleviate pain of five-year loss

While not a mind-blowing move, it is good to see that the Suzhou Chunxing Precision Mechanical Co., Ltd. (SZSE:002547) share price has gained 29% in the last three months. But that is little comfort to those holding over the last half decade, sitting on a big loss. In that time the share price has delivered a rude shock to holders, who find themselves down 50% after a long stretch. Some might say the recent bounce is to be expected after such a bad drop. But it could be that the fall was overdone.

While the last five years has been tough for Suzhou Chunxing Precision Mechanical shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

See our latest analysis for Suzhou Chunxing Precision Mechanical

Suzhou Chunxing Precision Mechanical 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over half a decade Suzhou Chunxing Precision Mechanical reduced its trailing twelve month revenue by 29% for each year. That's definitely a weaker result than most pre-profit companies report. It seems appropriate, then, that the share price slid about 8% annually during that time. It's fair to say most investors don't like to invest in loss making companies with falling revenue. You'd want to research this company pretty thoroughly before buying, it looks a bit too risky for us.

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 Suzhou Chunxing Precision Mechanical's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Investors in Suzhou Chunxing Precision Mechanical had a tough year, with a total loss of 3.0%, against a market gain of about 6.5%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 8% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It's always interesting to track share price performance over the longer term. But to understand Suzhou Chunxing Precision Mechanical better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Suzhou Chunxing Precision Mechanical , and understanding them should be part of your investment process.

But note: Suzhou Chunxing Precision Mechanical 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.