Loss-making Beijing E-Hualu Information Technology (SZSE:300212) has seen earnings and shareholder returns follow the same downward trajectory over past -52%

The nature of investing is that you win some, and you lose some. Anyone who held Beijing E-Hualu Information Technology Co., Ltd. (SZSE:300212) over the last year knows what a loser feels like. To wit the share price is down 52% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 52% lower than three years ago). The falls have accelerated recently, with the share price down 14% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 10% in the same timeframe.

On a more encouraging note the company has added CN¥662m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

See our latest analysis for Beijing E-Hualu Information Technology

Beijing E-Hualu Information 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In just one year Beijing E-Hualu Information Technology saw its revenue fall by 52%. That looks like a train-wreck result to investors far and wide. Arguably, the market has responded appropriately to this performance by sending the share price down 52% in the same time period. Buying shares in companies that lose money, shrink revenue, and see share price declines is unpopular with investors, but popular with speculators (apparently). This company will really need to improve on the numbers before we get excited about it.

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

If you are thinking of buying or selling Beijing E-Hualu Information Technology stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market lost about 17% in the twelve months, Beijing E-Hualu Information Technology shareholders did even worse, losing 52%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% 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. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Beijing E-Hualu Information Technology (of which 1 shouldn't be ignored!) you should know about.

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.