Investors bid Xinjiang Youhao(Group)Co.Ltd (SHSE:600778) up CN¥265m despite increasing losses YoY, taking three-year CAGR to 26%

By buying an index fund, investors can approximate the average market return. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Xinjiang Youhao(Group)Co.,Ltd (SHSE:600778) shareholders have seen the share price rise 98% over three years, well in excess of the market decline (19%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 56% in the last year.

The past week has proven to be lucrative for Xinjiang Youhao(Group)Co.Ltd investors, so let's see if fundamentals drove the company's three-year performance.

See our latest analysis for Xinjiang Youhao(Group)Co.Ltd

Given that Xinjiang Youhao(Group)Co.Ltd didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

Xinjiang Youhao(Group)Co.Ltd actually saw its revenue drop by 8.3% per year over three years. Despite the lack of revenue growth, the stock has returned 26%, compound, over three years. Unless the company is going to make profits soon, we would be pretty cautious about it.

The graphic below depicts how earnings and revenue have changed over time (unveil 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

We're pleased to report that Xinjiang Youhao(Group)Co.Ltd shareholders have received a total shareholder return of 56% over one year. That gain is better than the annual TSR over five years, which is 11%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Xinjiang Youhao(Group)Co.Ltd better, we need to consider many other factors. Take risks, for example - Xinjiang Youhao(Group)Co.Ltd has 2 warning signs we think you should be aware of.

Of course Xinjiang Youhao(Group)Co.Ltd 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.