Dongguan Eontec's (SZSE:300328) five-year decline in earnings translates into losses for shareholders

It is a pleasure to report that the Dongguan Eontec Co., Ltd. (SZSE:300328) is up 69% in the last quarter. But that doesn't change the fact that the returns over the last five years have been less than pleasing. After all, the share price is down 18% in that time, significantly under-performing the market.

While the last five years has been tough for Dongguan Eontec 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.

Check out our latest analysis for Dongguan Eontec

While Dongguan Eontec 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.

Over five years, Dongguan Eontec grew its revenue at 14% per year. That's a pretty good rate for a long time period. We doubt many shareholders are ok with the fact the share price has fallen 3% each year for half a decade. Those who bought back then clearly believed in stronger growth - and maybe even profits. There is always a big risk of losing money yourself when you buy shares in a company that loses money.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Dongguan Eontec's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Dongguan Eontec shareholders have received a total shareholder return of 9.9% over the last year. Notably the five-year annualised TSR loss of 3% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Dongguan Eontec better, we need to consider many other factors. For instance, we've identified 3 warning signs for Dongguan Eontec (2 shouldn't be ignored) that you should be aware of.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.