Zhuhai Aerospace Microchips Science & Technology (SZSE:300053) spikes 16% this week, taking three-year gains to 29%

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. Just take a look at Zhuhai Aerospace Microchips Science & Technology Co., Ltd. (SZSE:300053), which is up 29%, over three years, soundly beating the market decline of 25% (not including dividends).

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

View our latest analysis for Zhuhai Aerospace Microchips Science & Technology

Zhuhai Aerospace Microchips Science & Technology isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

Zhuhai Aerospace Microchips Science & Technology actually saw its revenue drop by 37% per year over three years. Despite the lack of revenue growth, the stock has returned 9%, compound, over three years. Unless the company is going to make profits soon, we would be pretty cautious about it.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

If you are thinking of buying or selling Zhuhai Aerospace Microchips Science & Technology stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Zhuhai Aerospace Microchips Science & Technology shareholders are down 24% for the year. Unfortunately, that's worse than the broader market decline of 10%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.1% over the last half decade. 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. It's always interesting to track share price performance over the longer term. But to understand Zhuhai Aerospace Microchips Science & Technology better, we need to consider many other factors. Take risks, for example - Zhuhai Aerospace Microchips Science & Technology has 2 warning signs (and 1 which is potentially serious) we think you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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

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.