While shareholders of JiangSu WuZhong Pharmaceutical Development (SHSE:600200) are in the black over 5 years, those who bought a week ago aren't so fortunate

Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. To wit, the JiangSu WuZhong Pharmaceutical Development share price has climbed 59% in five years, easily topping the market return of 2.1% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 29% in the last year.

While the stock has fallen 6.8% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

Check out our latest analysis for JiangSu WuZhong Pharmaceutical Development

Given that JiangSu WuZhong Pharmaceutical Development 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. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

For the last half decade, JiangSu WuZhong Pharmaceutical Development can boast revenue growth at a rate of 3.1% per year. That's not a very high growth rate considering the bottom line. While it's hard to say just how much value the company added over five years, the annualised share price gain of 10% seems about right. The business could be one worth watching but we generally prefer faster revenue growth.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

It's nice to see that JiangSu WuZhong Pharmaceutical Development shareholders have received a total shareholder return of 29% over the last year. That gain is better than the annual TSR over five years, which is 10%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand JiangSu WuZhong Pharmaceutical Development better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for JiangSu WuZhong Pharmaceutical Development you should know about.

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.