Zhejiang Wazam New MaterialsLTD (SHSE:603186) adds CN¥322m to market cap in the past 7 days, though investors from five years ago are still down 42%

It's nice to see the Zhejiang Wazam New Materials Co.,LTD. (SHSE:603186) share price up 12% in a week. But that doesn't change the fact that the returns over the last five years have been less than pleasing. In fact, the share price is down 44%, which falls well short of the return you could get by buying an index fund.

The recent uptick of 12% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for Zhejiang Wazam New MaterialsLTD

Zhejiang Wazam New MaterialsLTD 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last half decade, Zhejiang Wazam New MaterialsLTD saw its revenue increase by 14% per year. That's a pretty good rate for a long time period. Shareholders have seen the share price fall at 8% per year, for five years: a poor performance. Clearly, the expectations from back then have not been satisfied. The lesson is that if you buy shares in a money losing company you could end up losing money.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Zhejiang Wazam New MaterialsLTD's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Zhejiang Wazam New MaterialsLTD's TSR of was a loss of 42% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

We regret to report that Zhejiang Wazam New MaterialsLTD shareholders are down 30% for the year. Unfortunately, that's worse than the broader market decline of 17%. 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 7% 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 Zhejiang Wazam New MaterialsLTD better, we need to consider many other factors. For instance, we've identified 1 warning sign for Zhejiang Wazam New MaterialsLTD that you should be aware of.

Of course Zhejiang Wazam New MaterialsLTD 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.