Zhejiang Yangfan New Materials (SZSE:300637) pulls back 11% this week, but still delivers shareholders 7.1% CAGR over 3 years

Zhejiang Yangfan New Materials Co., Ltd. (SZSE:300637) shareholders might be concerned after seeing the share price drop 11% in the last week. But that shouldn't obscure the pleasing returns achieved by shareholders over the last three years. In fact, the company's share price bested the return of its market index in that time, posting a gain of 23%.

Although Zhejiang Yangfan New Materials has shed CN¥308m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for Zhejiang Yangfan New Materials

Given that Zhejiang Yangfan New Materials 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Zhejiang Yangfan New Materials actually saw its revenue drop by 4.5% per year over three years. Despite the lack of revenue growth, the stock has returned 7%, compound, over three years. Unless the company is going to make profits soon, we would be pretty cautious about it.

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

Take a more thorough look at Zhejiang Yangfan New Materials' financial health with this free report on its balance sheet.

A Different Perspective

While the broader market gained around 12% in the last year, Zhejiang Yangfan New Materials shareholders lost 5.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Even so, be aware that Zhejiang Yangfan New Materials is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.