Guizhou Yibai Pharmaceutical (SHSE:600594) shareholders are up 16% this past week, but still in the red over the last three years

Guizhou Yibai Pharmaceutical Co., Ltd. (SHSE:600594) shareholders should be happy to see the share price up 17% in the last quarter. But that doesn't help the fact that the three year return is less impressive. Truth be told the share price declined 40% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

On a more encouraging note the company has added CN¥380m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

View our latest analysis for Guizhou Yibai Pharmaceutical

Given that Guizhou Yibai Pharmaceutical 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years Guizhou Yibai Pharmaceutical saw its revenue shrink by 11% per year. That is not a good result. The stock has disappointed holders over the last three years, falling 12%, annualized. That makes sense given the lack of either profits or revenue growth. Of course, sentiment could become too negative, and the company may actually be making progress to profitability.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Guizhou Yibai Pharmaceutical's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that Guizhou Yibai Pharmaceutical shareholders are down 37% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 6.0%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Guizhou Yibai Pharmaceutical better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Guizhou Yibai Pharmaceutical you should be aware of, and 1 of them is potentially serious.

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.