Further weakness as Sai MicroElectronics (SZSE:300456) drops 3.8% this week, taking five-year losses to 32%

For many, the main point of investing is to generate higher returns than the overall market. But in any portfolio, there will be mixed results between individual stocks. So we wouldn't blame long term Sai MicroElectronics Inc. (SZSE:300456) shareholders for doubting their decision to hold, with the stock down 32% over a half decade. And some of the more recent buyers are probably worried, too, with the stock falling 25% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 9.9% in thirty days.

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

Check out our latest analysis for Sai MicroElectronics

Because Sai MicroElectronics 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 five years, Sai MicroElectronics grew its revenue at 13% per year. That's a pretty good rate for a long time period. We doubt many shareholders are ok with the fact the share price has fallen 6% each year for half a decade. Clearly, the expectations from back then have not been satisfied. There is always a big risk of losing money yourself when you buy shares in a company that loses money.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at Sai MicroElectronics' financial health with this free report on its balance sheet.

A Different Perspective

Investors in Sai MicroElectronics had a tough year, with a total loss of 25% (including dividends), against a market gain of about 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% 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. You could get a better understanding of Sai MicroElectronics' growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.