Further weakness as CITIC Guoan Information Industry (SZSE:000839) drops 5.8% this week, taking five-year losses to 68%

Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. For example the CITIC Guoan Information Industry Co., Ltd. (SZSE:000839) share price dropped 68% over five years. That's an unpleasant experience for long term holders. Furthermore, it's down 15% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for CITIC Guoan Information Industry isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for CITIC Guoan Information Industry

Given that CITIC Guoan Information Industry 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.

In the last five years CITIC Guoan Information Industry saw its revenue shrink by 9.0% per year. That's definitely a weaker result than most pre-profit companies report. Arguably, the market has responded appropriately to this business performance by sending the share price down 11% (annualized) in the same time period. We don't generally like to own companies that lose money and don't grow revenues. You might be better off spending your money on a leisure activity. This looks like a really risky stock to buy, at a glance.

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

If you are thinking of buying or selling CITIC Guoan Information Industry stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market lost about 13% in the twelve months, CITIC Guoan Information Industry shareholders did even worse, losing 17%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. However, the loss over the last year isn't as bad as the 11% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. 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. For example, we've discovered 2 warning signs for CITIC Guoan Information Industry that you should be aware of before investing here.

We will like CITIC Guoan Information Industry better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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.