The five-year loss for North China Pharmaceutical Company.Ltd (SHSE:600812) shareholders likely driven by its shrinking earnings

North China Pharmaceutical Company.Ltd (SHSE:600812) shareholders should be happy to see the share price up 10% in the last month. But if you look at the last five years the returns have not been good. In fact, the share price is down 35%, which falls well short of the return you could get by buying an index fund.

While the stock has risen 4.2% 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 North China Pharmaceutical Company.Ltd

We don't think that North China Pharmaceutical Company.Ltd's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. 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.

In the last five years North China Pharmaceutical Company.Ltd saw its revenue shrink by 3.1% per year. That's not what investors generally want to see. The share price decline at a rate of 6% per year is disappointing. But it doesn't surprise given the falling revenue. Without profits, its hard to see how shareholders win if the revenue keeps falling.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for North China Pharmaceutical Company.Ltd in this interactive graph of future profit estimates.

A Different Perspective

North China Pharmaceutical Company.Ltd's TSR for the year was broadly in line with the market average, at 24%. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 6% over the last five years. While 'turnarounds seldom turn' there are green shoots for North China Pharmaceutical Company.Ltd. 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. To that end, you should learn about the 2 warning signs we've spotted with North China Pharmaceutical Company.Ltd (including 1 which is potentially serious) .

Of course North China Pharmaceutical Company.Ltd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.