AVCON Information Technology (SZSE:300074 shareholders incur further losses as stock declines 14% this week, taking five-year losses to 22%

The main aim of stock picking is to find the market-beating stocks. But every investor is virtually certain to have both over-performing and under-performing stocks. At this point some shareholders may be questioning their investment in AVCON Information Technology Co., Ltd. (SZSE:300074), since the last five years saw the share price fall 22%. And some of the more recent buyers are probably worried, too, with the stock falling 21% in the last year. Unfortunately the last month hasn't been any better, with the share price down 27%.

Since AVCON Information Technology has shed CN¥309m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Check out our latest analysis for AVCON Information Technology

Because AVCON Information Technology 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over half a decade AVCON Information Technology reduced its trailing twelve month revenue by 1.3% for each year. While far from catastrophic that is not good. The stock hasn't done well for shareholders in the last five years, falling 4%, annualized. Unfortunately, though, it makes sense given the lack of either profits or revenue growth. Without profits, its hard to see how shareholders win if the revenue keeps falling.

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

Take a more thorough look at AVCON Information Technology's financial health with this free report on its balance sheet.

A Different Perspective

Investors in AVCON Information Technology had a tough year, with a total loss of 21%, against a market gain of about 6.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. For instance, we've identified 1 warning sign for AVCON Information Technology that you should be aware of.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.