Fujian Jinsen ForestryLtd (SZSE:002679) stock falls 13% in past week as three-year earnings and shareholder returns continue downward trend

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Fujian Jinsen Forestry Co.,Ltd (SZSE:002679) have had an unfortunate run in the last three years. So they might be feeling emotional about the 68% share price collapse, in that time. And more recent buyers are having a tough time too, with a drop of 45% in the last year. Furthermore, it's down 19% in about a quarter. That's not much fun for holders.

Since Fujian Jinsen ForestryLtd has shed CN¥257m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Fujian Jinsen ForestryLtd

Given that Fujian Jinsen ForestryLtd only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last three years Fujian Jinsen ForestryLtd saw its revenue shrink by 1.3% per year. That is not a good result. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 19% per year. Having said that, if growth is coming in the future, now may be the low ebb for the company. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

If you are thinking of buying or selling Fujian Jinsen ForestryLtd stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Fujian Jinsen ForestryLtd shareholders are down 45% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 12%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% 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 Fujian Jinsen ForestryLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Fujian Jinsen ForestryLtd (at least 2 which are a bit concerning) , and understanding them should be part of your investment process.

But note: Fujian Jinsen ForestryLtd 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.