Optimism around Beijing StarNeto Technology (SZSE:002829) delivering new earnings growth may be shrinking as stock declines 11% this past week

Investing in stocks comes with the risk that the share price will fall. And there's no doubt that Beijing StarNeto Technology Co., Ltd. (SZSE:002829) stock has had a really bad year. The share price is down a hefty 63% in that time. Even if you look out three years, the returns are still disappointing, with the share price down50% in that time. Furthermore, it's down 41% in about a quarter. That's not much fun for holders.

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

See our latest analysis for Beijing StarNeto Technology

We don't think that Beijing StarNeto Technology's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In just one year Beijing StarNeto Technology saw its revenue fall by 40%. That looks pretty grim, at a glance. In the absence of profits, it's not unreasonable that the share price fell 63%. Fingers crossed this is the low ebb for the stock. We have a natural aversion to companies that are losing money and shrinking revenue. But perhaps that is being too careful.

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

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

A Different Perspective

We regret to report that Beijing StarNeto Technology shareholders are down 62% for the year. Unfortunately, that's worse than the broader market decline of 16%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Even so, be aware that Beijing StarNeto Technology is showing 3 warning signs in our investment analysis , you should know about...

Of course Beijing StarNeto 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com