Fujian Start GroupLtd (SHSE:600734) adds CN¥479m to market cap in the past 7 days, though investors from five years ago are still down 63%

While it may not be enough for some shareholders, we think it is good to see the Fujian Start Group Co.Ltd (SHSE:600734) share price up 18% in a single quarter. But that doesn't change the fact that the returns over the last half decade have been disappointing. In that time the share price has delivered a rude shock to holders, who find themselves down 63% after a long stretch. So we're not so sure if the recent bounce should be celebrated. But it could be that the fall was overdone.

Although the past week has been more reassuring for shareholders, they're still in the red over the last five years, so let's see if the underlying business has been responsible for the decline.

View our latest analysis for Fujian Start GroupLtd

We don't think that Fujian Start GroupLtd's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over half a decade Fujian Start GroupLtd reduced its trailing twelve month revenue by 56% for each year. That's definitely a weaker result than most pre-profit companies report. It seems appropriate, then, that the share price slid about 10% annually during that time. We don't generally like to own companies that lose money and don't grow revenues. You might be better off spending your money on a leisure activity. This looks like a really risky stock to buy, at a glance.

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 Fujian Start GroupLtd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Fujian Start GroupLtd shareholders are down 15% over twelve months, which isn't far from the market return of -14%. Worse still, the company has lost shareholders 10% per year over five years. Generally speaking we'd prefer see an improvement in the fundamental metrics before becoming enthusiastic about the stock. It's always interesting to track share price performance over the longer term. But to understand Fujian Start GroupLtd better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Fujian Start GroupLtd you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.