GuangYuYuan Chinese Herbal Medicine (SHSE:600771) shareholders are up 5.8% this past week, but still in the red over the last three years

GuangYuYuan Chinese Herbal Medicine Co., Ltd. (SHSE:600771) shareholders should be happy to see the share price up 17% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. Truth be told the share price declined 39% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

While the stock has risen 5.8% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

View our latest analysis for GuangYuYuan Chinese Herbal Medicine

While GuangYuYuan Chinese Herbal Medicine made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Over three years, GuangYuYuan Chinese Herbal Medicine grew revenue at 12% per year. That's a pretty good rate of top-line growth. Shareholders have seen the share price fall at 12% per year, for three years. This implies the market had higher expectations of GuangYuYuan Chinese Herbal Medicine. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Take a more thorough look at GuangYuYuan Chinese Herbal Medicine's financial health with this free report on its balance sheet.

A Different Perspective

Investors in GuangYuYuan Chinese Herbal Medicine had a tough year, with a total loss of 34%, against a market gain of about 9.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 6% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Even so, be aware that GuangYuYuan Chinese Herbal Medicine is showing 1 warning sign in our investment analysis , you should know about...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.