Gospell Digital Technology (SZSE:002848) delivers shareholders favorable 11% CAGR over 3 years, surging 23% in the last week alone

By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, Gospell Digital Technology Co., Ltd. (SZSE:002848) shareholders have seen the share price rise 36% over three years, well in excess of the market decline (19%, not including dividends).

The past week has proven to be lucrative for Gospell Digital Technology investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Gospell Digital Technology

Gospell Digital Technology wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Gospell Digital Technology actually saw its revenue drop by 34% per year over three years. The revenue growth might be lacking but the share price has gained 11% each year in that time. Unless the company is going to make profits soon, we would be pretty cautious about it.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

If you are thinking of buying or selling Gospell Digital Technology stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market gained around 7.8% in the last year, Gospell Digital Technology shareholders lost 9.7%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.1% per year over five years. 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. It's always interesting to track share price performance over the longer term. But to understand Gospell Digital Technology better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Gospell Digital Technology (of which 1 is significant!) you should know about.

But note: Gospell Digital Technology may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.