Guangxi Oriental Intelligent Manufacturing Technology (SZSE:002175) pulls back 6.3% this week, but still delivers shareholders favorable 15% CAGR over 5 years

Guangxi Oriental Intelligent Manufacturing Technology Co., Ltd. (SZSE:002175) shareholders might be concerned after seeing the share price drop 15% in the last month. But that doesn't change the fact that the returns over the last five years have been pleasing. After all, the share price is up a market-beating 98% in that time.

In light of the stock dropping 6.3% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

See our latest analysis for Guangxi Oriental Intelligent Manufacturing Technology

We don't think that Guangxi Oriental Intelligent Manufacturing Technology'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.

In the last 5 years Guangxi Oriental Intelligent Manufacturing Technology saw its revenue grow at 6.7% per year. That's a pretty good long term growth rate. While the share price has beat the market, compounding at 15% yearly, over five years, there's certainly some potential that the market hasn't fully considered the growth track record. If revenue growth can maintain for long enough, it's likely profits will flow. There's no doubt that it can be difficult to value pre-profit companies.

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

This free interactive report on Guangxi Oriental Intelligent Manufacturing Technology's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Guangxi Oriental Intelligent Manufacturing Technology has rewarded shareholders with a total shareholder return of 55% in the last twelve months. That gain is better than the annual TSR over five years, which is 15%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Guangxi Oriental Intelligent Manufacturing Technology (including 1 which can't be ignored) .

Of course Guangxi Oriental Intelligent Manufacturing Technology 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.