The three-year earnings decline is not helping Sumavision TechnologiesLtd's (SZSE:300079 share price, as stock falls another 6.8% in past week

It is doubtless a positive to see that the Sumavision Technologies Co.,Ltd. (SZSE:300079) share price has gained some 53% in the last three months. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 33% in the last three years, significantly under-performing the market.

With the stock having lost 6.8% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Sumavision TechnologiesLtd

Given that Sumavision TechnologiesLtd only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over the last three years, Sumavision TechnologiesLtd's revenue dropped 19% per year. That means its revenue trend is very weak compared to other loss making companies. With revenue in decline, the share price decline of 10% per year is hardly undeserved. The key question now is whether the company has the capacity to fund itself to profitability, without more cash. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.

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

Sumavision TechnologiesLtd shareholders are up 5.5% for the year (even including dividends). But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 0.7% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. 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 - Sumavision TechnologiesLtd has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.