Strong week for LianChuang Electronic TechnologyLtd (SZSE:002036) shareholders doesn't alleviate pain of three-year loss

If you love investing in stocks you're bound to buy some losers. But long term LianChuang Electronic Technology Co.,Ltd (SZSE:002036) shareholders have had a particularly rough ride in the last three year. Regrettably, they have had to cope with a 56% drop in the share price over that period. Unfortunately the share price momentum is still quite negative, with prices down 8.8% in thirty days. However, we note the price may have been impacted by the broader market, which is down 4.8% in the same time period.

On a more encouraging note the company has added CN¥549m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

See our latest analysis for LianChuang Electronic TechnologyLtd

Given that LianChuang Electronic TechnologyLtd didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally hope to see good revenue growth. 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.

Over three years, LianChuang Electronic TechnologyLtd grew revenue at 0.9% per year. That's not a very high growth rate considering it doesn't make profits. It's likely this weak growth has contributed to an annualised return of 16% for the last three years. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. After all, growing a business isn't easy, and the process will not always be smooth.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We're pleased to report that LianChuang Electronic TechnologyLtd shareholders have received a total shareholder return of 26% over one year. There's no doubt those recent returns are much better than the TSR loss of 6% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the 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. For instance, we've identified 1 warning sign for LianChuang Electronic TechnologyLtd that you should be aware of.

But note: LianChuang Electronic TechnologyLtd 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.