Shenzhen InfoGem Technologies (SZSE:300085 shareholders incur further losses as stock declines 6.1% this week, taking three-year losses to 41%

For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Shenzhen InfoGem Technologies Co., Ltd. (SZSE:300085) shareholders have had that experience, with the share price dropping 41% in three years, versus a market decline of about 20%. And more recent buyers are having a tough time too, with a drop of 21% in the last year. Furthermore, it's down 17% in about a quarter. That's not much fun for holders.

After losing 6.1% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Shenzhen InfoGem Technologies

Because Shenzhen InfoGem Technologies made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years Shenzhen InfoGem Technologies saw its revenue shrink by 11% per year. That is not a good result. The stock has disappointed holders over the last three years, falling 12%, annualized. That makes sense given the lack of either profits or revenue growth. However, in this kind of situation you can sometimes find opportunity, where sentiment is negative but the company is actually making good progress.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

While the broader market lost about 8.9% in the twelve months, Shenzhen InfoGem Technologies shareholders did even worse, losing 21%. 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 6% over the last half decade. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 1 warning sign for Shenzhen InfoGem Technologies that you should be aware of.

Of course Shenzhen InfoGem Technologies 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.