Xinjiang Youhao(Group)Co.Ltd (SHSE:600778) dips 20% this week as increasing losses might not be inspiring confidence among its investors

The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by Xinjiang Youhao(Group)Co.,Ltd (SHSE:600778) shareholders over the last year, as the share price declined 42%. That falls noticeably short of the market decline of around 20%. Longer term investors have fared much better, since the share price is up 5.9% in three years. Shareholders have had an even rougher run lately, with the share price down 41% in the last 90 days.

Since Xinjiang Youhao(Group)Co.Ltd has shed CN¥293m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

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

Xinjiang Youhao(Group)Co.Ltd isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Xinjiang Youhao(Group)Co.Ltd's revenue didn't grow at all in the last year. In fact, it fell 8.1%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 42% in that time. What would you expect when revenue is falling, and it doesn't make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Xinjiang Youhao(Group)Co.Ltd's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 20% in the twelve months, Xinjiang Youhao(Group)Co.Ltd shareholders did even worse, losing 42%. 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 7% 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 1 warning sign for Xinjiang Youhao(Group)Co.Ltd that you should be aware of.

We will like Xinjiang Youhao(Group)Co.Ltd better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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.