Jiangsu Sihuan Bioengineering (SZSE:000518 investor three-year losses grow to 24% as the stock sheds CN¥628m this past week

Jiangsu Sihuan Bioengineering Co., Ltd (SZSE:000518) shareholders should be happy to see the share price up 25% in the last quarter. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 24% in the last three years, falling well short of the market return.

With the stock having lost 18% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Jiangsu Sihuan Bioengineering

Jiangsu Sihuan Bioengineering wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years Jiangsu Sihuan Bioengineering saw its revenue shrink by 19% per year. That means its revenue trend is very weak compared to other loss making companies. On the face of it we'd posit the share price fall of 7% compound, over three years is well justified by the fundamental deterioration. The key question now is whether the company has the capacity to fund itself to profitability, without more cash. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Jiangsu Sihuan Bioengineering's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 12% in the last year, Jiangsu Sihuan Bioengineering shareholders lost 17%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Jiangsu Sihuan Bioengineering is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...

Of course Jiangsu Sihuan Bioengineering 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.