Tian Jin Bohai ChemicalLtd (SHSE:600800 investor five-year losses grow to 65% as the stock sheds CN¥322m this past week

Statistically speaking, long term investing is a profitable endeavour. But no-one is immune from buying too high. For example the Tian Jin Bohai Chemical Co.,Ltd. (SHSE:600800) share price dropped 65% over five years. That's not a lot of fun for true believers. And some of the more recent buyers are probably worried, too, with the stock falling 39% in the last year.

Since Tian Jin Bohai ChemicalLtd has shed CN¥322m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Tian Jin Bohai ChemicalLtd

Tian Jin Bohai ChemicalLtd 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last half decade, Tian Jin Bohai ChemicalLtd saw its revenue increase by 17% per year. That's better than most loss-making companies. In contrast, the share price is has averaged a loss of 11% per year - that's quite disappointing. It's safe to say investor expectations are more grounded now. If you think the company can keep up its revenue growth, you'd have to consider the possibility that there's an opportunity here.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Tian Jin Bohai ChemicalLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 9.6% in the twelve months, Tian Jin Bohai ChemicalLtd shareholders did even worse, losing 39%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% 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. It's always interesting to track share price performance over the longer term. But to understand Tian Jin Bohai ChemicalLtd better, we need to consider many other factors. Even so, be aware that Tian Jin Bohai ChemicalLtd is showing 1 warning sign in our investment analysis , you should know about...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.