Sailong Pharmaceutical GroupLtd (SZSE:002898) shareholder returns have been , earning 13% in 3 years

By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, Sailong Pharmaceutical Group Co.,Ltd. (SZSE:002898) shareholders have seen the share price rise 12% over three years, well in excess of the market decline (30%, not including dividends).

The past week has proven to be lucrative for Sailong Pharmaceutical GroupLtd investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Sailong Pharmaceutical GroupLtd

While Sailong Pharmaceutical GroupLtd 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. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Sailong Pharmaceutical GroupLtd's revenue trended up 20% each year over three years. That's well above most pre-profit companies. While the compound gain of 4% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at Sailong Pharmaceutical GroupLtd. If the company is trending towards profitability then it could be very interesting.

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

If you are thinking of buying or selling Sailong Pharmaceutical GroupLtd stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While it's never nice to take a loss, Sailong Pharmaceutical GroupLtd shareholders can take comfort that , including dividends,their trailing twelve month loss of 6.9% wasn't as bad as the market loss of around 18%. Given the total loss of 2% per year over five years, it seems returns have deteriorated in the last twelve months. Whilst Baron Rothschild does tell the investor "buy when there's blood in the streets, even if the blood is your own", buyers would need to examine the data carefully to be comfortable that the business itself is sound. 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. Take risks, for example - Sailong Pharmaceutical GroupLtd has 2 warning signs (and 1 which can't be ignored) we think you should know about.

But note: Sailong Pharmaceutical GroupLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com