HPFLtd (SZSE:300350 investor three-year losses grow to 22% as the stock sheds CN¥483m this past week

While not a mind-blowing move, it is good to see that the HPF Co.,Ltd (SZSE:300350) share price has gained 26% in the last three months. But that doesn't help the fact that the three year return is less impressive. Truth be told the share price declined 22% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

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

See our latest analysis for HPFLtd

HPFLtd isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, HPFLtd's revenue dropped 19% per year. That's definitely a weaker result than most pre-profit companies report. On the face of it we'd posit the share price fall of 7% compound, over three years is well justified by the fundamental deterioration. It would probably be worth asking whether the company can fund itself to profitability. Of course, it is possible for businesses to bounce back from a revenue drop - but we'd want to see that before getting interested.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of HPFLtd's earnings, revenue and cash flow.

A Different Perspective

HPFLtd shareholders have received returns of 15% over twelve months, which isn't far from the general market return. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 1.8%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

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.