Neusoft's (SHSE:600718) earnings have declined over three years, contributing to shareholders 37% loss

For many investors, the main point of stock picking is to generate higher returns than the overall market. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Neusoft Corporation (SHSE:600718) shareholders, since the share price is down 38% in the last three years, falling well short of the market decline of around 17%. Even worse, it's down 12% in about a month, which isn't fun at all. But this could be related to poor market conditions -- stocks are down 6.4% in the same time.

While the last three years has been tough for Neusoft 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.

View our latest analysis for Neusoft

Given that Neusoft only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last three years, Neusoft saw its revenue grow by 9.3% per year, compound. That's a fairly respectable growth rate. Shareholders have seen the share price fall at 11% per year, for three years. This implies the market had higher expectations of Neusoft. With revenue growing at a solid clip, now might be the time to focus on the possibility that it will have a brighter future.

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

We know that Neusoft has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Neusoft

A Different Perspective

It's good to see that Neusoft has rewarded shareholders with a total shareholder return of 15% in the last twelve months. That's including the dividend. That certainly beats the loss of about 3% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the 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 Neusoft that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.