Even though Changzhou Tiansheng New Materials Group (SZSE:300169) has lost CN¥280m market cap in last 7 days, shareholders are still up 31% over 3 years

One simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at Changzhou Tiansheng New Materials Group Co., Ltd. (SZSE:300169), which is up 31%, over three years, soundly beating the market decline of 4.0% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 14% in the last year.

Although Changzhou Tiansheng New Materials Group has shed CN¥280m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Changzhou Tiansheng New Materials Group 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Changzhou Tiansheng New Materials Group actually saw its revenue drop by 11% per year over three years. The revenue growth might be lacking but the share price has gained 9% each year in that time. Unless the company is going to make profits soon, we would be pretty cautious about it.

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. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

Changzhou Tiansheng New Materials Group shareholders gained a total return of 14% during the year. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 1.3% over half a decade This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Changzhou Tiansheng New Materials Group better, we need to consider many other factors. For instance, we've identified 1 warning sign for Changzhou Tiansheng New Materials Group that you should be aware of.

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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.