Investors more bullish on Global Infotech (SZSE:300465) this week as stock hikes 42%, despite earnings trending downwards over past five years

Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And in our experience, buying the right stocks can give your wealth a significant boost. For example, the Global Infotech Co., Ltd. (SZSE:300465) share price is up 80% in the last 5 years, clearly besting the market return of around 25% (ignoring dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 60%.

Since it's been a strong week for Global Infotech shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Global Infotech

Given that Global Infotech only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last 5 years Global Infotech saw its revenue shrink by 7.9% per year. Even though revenue hasn't increased, the stock actually gained 12%, per year, during the same period. It's probably worth checking other factors such as the profitability, to try to understand the share price action. It may not be reflecting the revenue.

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

This free interactive report on Global Infotech's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Global Infotech has rewarded shareholders with a total shareholder return of 60% in the last twelve months. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Global Infotech better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Global Infotech you should know about.

But note: Global Infotech may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.