Investors ignore increasing losses at Guangdong Xianglu Tungsten (SZSE:002842) as stock jumps 11% this past week

The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. To wit, the Guangdong Xianglu Tungsten Co., Ltd. (SZSE:002842) share price is 35% higher than it was a year ago, much better than the market return of around 17% (not including dividends) in the same period. That's a solid performance by our standards! Zooming out, the stock is actually down 29% in the last three years.

The past week has proven to be lucrative for Guangdong Xianglu Tungsten investors, so let's see if fundamentals drove the company's one-year performance.

See our latest analysis for Guangdong Xianglu Tungsten

Given that Guangdong Xianglu Tungsten didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

In the last year Guangdong Xianglu Tungsten saw its revenue shrink by 1.1%. Despite the lack of revenue growth, the stock has returned a solid 35% the last twelve months. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free report showing analyst forecasts should help you form a view on Guangdong Xianglu Tungsten

A Different Perspective

It's good to see that Guangdong Xianglu Tungsten has rewarded shareholders with a total shareholder return of 35% in the last twelve months. That certainly beats the loss of about 6% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. For example, we've discovered 2 warning signs for Guangdong Xianglu Tungsten that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.