Further weakness as New Guomai Digital Culture (SHSE:600640) drops 4.2% this week, taking five-year losses to 47%

It is doubtless a positive to see that the New Guomai Digital Culture Co., Ltd. (SHSE:600640) share price has gained some 43% in the last three months. But if you look at the last five years the returns have not been good. After all, the share price is down 47% in that time, significantly under-performing the market.

With the stock having lost 4.2% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for New Guomai Digital Culture

Given that New Guomai Digital Culture 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. 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.

In the last five years New Guomai Digital Culture saw its revenue shrink by 13% per year. That's definitely a weaker result than most pre-profit companies report. On the face of it we'd posit the share price fall of 8% compound, over five years is well justified by the fundamental deterioration. We doubt many shareholders are delighted with this share price performance. Risk averse investors probably wouldn't like this one much.

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

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. Dive deeper into the earnings by checking this interactive graph of New Guomai Digital Culture's earnings, revenue and cash flow.

A Different Perspective

It's good to see that New Guomai Digital Culture has rewarded shareholders with a total shareholder return of 21% in the last twelve months. That's including the dividend. Notably the five-year annualised TSR loss of 8% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand New Guomai Digital Culture better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with New Guomai Digital Culture , and understanding them should be part of your investment process.

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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.