Wuhan Jingce Electronic GroupLtd (SZSE:300567) shareholders have lost 36% over 1 year, earnings decline likely the culprit

The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Wuhan Jingce Electronic Group Co.,Ltd (SZSE:300567) share price is down 36% in the last year. That's disappointing when you consider the market declined 16%. At least the damage isn't so bad if you look at the last three years, since the stock is down 16% in that time. Even worse, it's down 11% in about a month, which isn't fun at all.

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

Check out our latest analysis for Wuhan Jingce Electronic GroupLtd

While Wuhan Jingce Electronic GroupLtd made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In just one year Wuhan Jingce Electronic GroupLtd saw its revenue fall by 18%. That's not what investors generally want to see. The stock price has languished lately, falling 36% in a year. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

While the broader market lost about 16% in the twelve months, Wuhan Jingce Electronic GroupLtd shareholders did even worse, losing 36% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Wuhan Jingce Electronic GroupLtd that you should be aware of before investing here.

We will like Wuhan Jingce Electronic GroupLtd better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider 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.