Investors are selling off Jiangxi Fushine Pharmaceutical (SZSE:300497), lack of profits no doubt contribute to shareholders one-year loss

It's easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the Jiangxi Fushine Pharmaceutical Co., Ltd. (SZSE:300497) share price is down 37% in the last year. That falls noticeably short of the market decline of around 16%. Notably, shareholders had a tough run over the longer term, too, with a drop of 35% in the last three years. Unfortunately the share price momentum is still quite negative, with prices down 11% in thirty days.

If the past week is anything to go by, investor sentiment for Jiangxi Fushine Pharmaceutical isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Jiangxi Fushine Pharmaceutical

Jiangxi Fushine Pharmaceutical 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. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Jiangxi Fushine Pharmaceutical grew its revenue by 6.6% over the last year. While that may seem decent it isn't great considering the company is still making a loss. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 37% in a year. It's important not to lose sight of the fact that profitless companies must grow. So remember, if you buy a profitless company then you risk being a profitless investor.

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 Jiangxi Fushine Pharmaceutical stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Jiangxi Fushine Pharmaceutical shareholders are down 37% for the year. Unfortunately, that's worse than the broader market decline of 16%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. 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. For example, we've discovered 1 warning sign for Jiangxi Fushine Pharmaceutical that you should be aware of before investing here.

Of course Jiangxi Fushine Pharmaceutical 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.