Investors push Suzhou Jinfu Technology (SZSE:300128) 8.5% lower this week, company's increasing losses might be to blame

By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. For example, Suzhou Jinfu Technology Co., Ltd. (SZSE:300128) shareholders have seen the share price rise 31% over three years, well in excess of the market decline (19%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 20% in the last year.

While this past week has detracted from the company's three-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

Check out our latest analysis for Suzhou Jinfu Technology

Suzhou Jinfu 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Suzhou Jinfu Technology's revenue trended up 24% each year over three years. That's much better than most loss-making companies. While the compound gain of 10% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. So now might be the perfect time to put Suzhou Jinfu Technology on your radar. If the company is trending towards profitability then it could be very interesting.

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 Suzhou Jinfu Technology's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We're pleased to report that Suzhou Jinfu Technology shareholders have received a total shareholder return of 20% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 5% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Case in point: We've spotted 3 warning signs for Suzhou Jinfu Technology you should be aware of, and 2 of them are a bit concerning.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.