Strong week for Zhejiang East Crystal ElectronicLtd (SZSE:002199) shareholders doesn't alleviate pain of five-year loss

It is doubtless a positive to see that the Zhejiang East Crystal Electronic Co.,Ltd. (SZSE:002199) share price has gained some 41% in the last three months. 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 41%, which falls well short of the return you could get by buying an index fund.

On a more encouraging note the company has added CN¥270m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

View our latest analysis for Zhejiang East Crystal ElectronicLtd

Because Zhejiang East Crystal ElectronicLtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Over half a decade Zhejiang East Crystal ElectronicLtd reduced its trailing twelve month revenue by 4.6% for each year. That's not what investors generally want to see. The share price decline at a rate of 7% per year is disappointing. But it doesn't surprise given the falling revenue. Without profits, its hard to see how shareholders win if the revenue keeps falling.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Zhejiang East Crystal ElectronicLtd shareholders are down 3.5% for the year, but the market itself is up 0.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 7% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand Zhejiang East Crystal ElectronicLtd better, we need to consider many other factors. Even so, be aware that Zhejiang East Crystal ElectronicLtd is showing 3 warning signs in our investment analysis , and 2 of those make us uncomfortable...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.