Even after rising 11% this past week, Beijing Zodi Investment (SZSE:000609) shareholders are still down 62% over the past year

While it may not be enough for some shareholders, we think it is good to see the Beijing Zodi Investment Co., Ltd. (SZSE:000609) share price up 16% in a single quarter. But that doesn't change the fact that the returns over the last year have been disappointing. Like an arid lake in a warming world, shareholder value has evaporated, with the share price down 62% in that time. Some might say the recent bounce is to be expected after such a bad drop. It may be that the fall was an overreaction.

While the last year has been tough for Beijing Zodi Investment shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Check out our latest analysis for Beijing Zodi Investment

Beijing Zodi Investment 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Beijing Zodi Investment grew its revenue by 1,407% over the last year. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 62%. Typically a growth stock like this will be volatile, with some shareholders concerned about the red ink on the bottom line (that is, the losses). Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?

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 Beijing Zodi Investment stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market gained around 3.3% in the last year, Beijing Zodi Investment shareholders lost 62%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 instance, we've identified 2 warning signs for Beijing Zodi Investment (1 is a bit unpleasant) that you should be aware of.

Of course Beijing Zodi Investment 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.