While shareholders of Beijing Join-Cheer Software (SZSE:002279) are in the black over 3 years, those who bought a week ago aren't so fortunate

Beijing Join-Cheer Software Co., Ltd. (SZSE:002279) shareholders might be concerned after seeing the share price drop 21% in the last month. But don't let that distract from the very nice return generated over three years. After all, the share price is up a market-beating 24% in that time.

In light of the stock dropping 14% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.

View our latest analysis for Beijing Join-Cheer Software

Beijing Join-Cheer Software 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Beijing Join-Cheer Software saw its revenue grow at 15% per year. That's pretty nice growth. The share price gain of 7% per year shows that the market is paying attention to this growth. If that's the case, then it could be well worth while to research the growth trajectory. Of course, it's always worth considering funding risks when a company isn't profitable.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on Beijing Join-Cheer Software's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Beijing Join-Cheer Software shareholders are down 7.6% for the year, but the market itself is up 6.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.8% 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

We will like Beijing Join-Cheer Software better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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.