BlueFocus Intelligent Communications Group (SZSE:300058) shareholders are up 6.8% this past week, but still in the red over the last year

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by BlueFocus Intelligent Communications Group Co., Ltd. (SZSE:300058) shareholders over the last year, as the share price declined 38%. That falls noticeably short of the market decline of around 18%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 4.5% in three years. Shareholders have had an even rougher run lately, with the share price down 18% in the last 90 days. But this could be related to the weak market, which is down 8.1% in the same period.

Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.

Check out our latest analysis for BlueFocus Intelligent Communications Group

We don't think that BlueFocus Intelligent Communications Group's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. 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.

In the last twelve months, BlueFocus Intelligent Communications Group increased its revenue by 52%. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 38% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized.

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

We know that BlueFocus Intelligent Communications Group has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on BlueFocus Intelligent Communications Group

A Different Perspective

While the broader market lost about 18% in the twelve months, BlueFocus Intelligent Communications Group shareholders did even worse, losing 38% (even including dividends). 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. On the bright side, long term shareholders have made money, with a gain of 2% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. You could get a better understanding of BlueFocus Intelligent Communications Group's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

We will like BlueFocus Intelligent Communications Group better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com