Shareholders in Zhe Jiang Dali TechnologyLtd (SZSE:002214) have lost 54%, as stock drops 8.0% this past week

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Zhe Jiang Dali Technology Co.,Ltd (SZSE:002214) shareholders know that all too well, since the share price is down considerably over three years. So they might be feeling emotional about the 55% share price collapse, in that time.

If the past week is anything to go by, investor sentiment for Zhe Jiang Dali TechnologyLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Zhe Jiang Dali TechnologyLtd

Given that Zhe Jiang Dali 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. 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.

In the last three years Zhe Jiang Dali TechnologyLtd saw its revenue shrink by 58% per year. That means its revenue trend is very weak compared to other loss making companies. Arguably, the market has responded appropriately to this business performance by sending the share price down 16% (annualized) in the same time period. When revenue is dropping, and losses are still costing, and the share price sinking fast, it's fair to ask if something is remiss. It could be a while before the company repays long suffering shareholders with share price gains.

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

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

A Different Perspective

While it's certainly disappointing to see that Zhe Jiang Dali TechnologyLtd shares lost 1.7% throughout the year, that wasn't as bad as the market loss of 19%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 9% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. 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. Take risks, for example - Zhe Jiang Dali TechnologyLtd has 1 warning sign we think you should be aware of.

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.