The three-year returns have been decent for Cultural Investment HoldingsLtd (SHSE:600715) shareholders despite underlying losses increasing

By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, Cultural Investment Holdings Co.,Ltd (SHSE:600715) shareholders have seen the share price rise 63% over three years, well in excess of the market decline (18%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 47% in the last year.

The past week has proven to be lucrative for Cultural Investment HoldingsLtd investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Cultural Investment HoldingsLtd

Cultural Investment HoldingsLtd 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. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Cultural Investment HoldingsLtd saw its revenue shrink by 13% per year. Despite the lack of revenue growth, the stock has returned 18%, compound, over three years. If the company is cutting costs profitability could be on the horizon, but the revenue decline is a prima facie concern.

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

It's probably worth noting that the CEO is paid less than the median at similar sized 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. It might be well worthwhile taking a look at our free report on Cultural Investment HoldingsLtd's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Cultural Investment HoldingsLtd has rewarded shareholders with a total shareholder return of 47% in the last twelve months. That gain is better than the annual TSR over five years, which is 7%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Cultural Investment HoldingsLtd you should know about.

But note: Cultural Investment HoldingsLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.