Shareholders in Landfar Bio-medicine (SZSE:000504) have lost 52%, as stock drops 12% this past week

While not a mind-blowing move, it is good to see that the Landfar Bio-medicine Co., Ltd (SZSE:000504) share price has gained 25% in the last three months. But that doesn't change the fact that the returns over the last three years have been disappointing. Regrettably, the share price slid 52% in that period. So the improvement may be a real relief to some. After all, could be that the fall was overdone.

Since Landfar Bio-medicine has shed CN¥409m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Landfar Bio-medicine

Because Landfar Bio-medicine made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally hope to see good 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 Landfar Bio-medicine saw its revenue shrink by 14% per year. That is not a good result. The share price decline of 15% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Having said that, if growth is coming in the future, now may be the low ebb for the company. We'd be pretty wary of this one until it makes a profit, because we don't specialize in finding turnaround situations.

You can see below how earnings and revenue have changed over time (discover 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

Investors in Landfar Bio-medicine had a tough year, with a total loss of 20%, against a market gain of about 14%. 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. Longer term investors wouldn't be so upset, since they would have made 2%, each year, over five years. 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. It's always interesting to track share price performance over the longer term. But to understand Landfar Bio-medicine better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Landfar Bio-medicine (including 1 which can't be ignored) .

Of course Landfar Bio-medicine 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.