Investors in Shenzhen Deren Electronic (SZSE:002055) from three years ago are still down 44%, even after 12% gain this past week

Shenzhen Deren Electronic Co., Ltd. (SZSE:002055) shareholders will doubtless be very grateful to see the share price up 35% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 44% in the last three years, falling well short of the market return.

On a more encouraging note the company has added CN¥514m 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 Shenzhen Deren Electronic

Given that Shenzhen Deren Electronic 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, Shenzhen Deren Electronic's revenue dropped 14% per year. That's not what investors generally want to see. The annual decline of 13% per year in that period has clearly disappointed holders. That makes sense given the lack of either profits or revenue growth. However, in this kind of situation you can sometimes find opportunity, where sentiment is negative but the company is actually making good progress.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Shenzhen Deren Electronic's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market gained around 9.8% in the last year, Shenzhen Deren Electronic shareholders lost 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Shenzhen Deren Electronic better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Shenzhen Deren Electronic you should be aware of.

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.