Shareholders in D&G Technology Holding (HKG:1301) have lost 33%, as stock drops 15% this past week

Investors are understandably disappointed when a stock they own declines in value. But no-one can make money on every call, especially in a declining market. The D&G Technology Holding Company Limited (HKG:1301) is down 33% over three years, but the total shareholder return is -33% once you include the dividend. That's better than the market which declined 34% over the last three years. And over the last year the share price fell 31%, so we doubt many shareholders are delighted. Furthermore, it's down 20% in about a quarter. That's not much fun for holders.

With the stock having lost 15% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for D&G Technology Holding

Because D&G Technology Holding 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years D&G Technology Holding saw its revenue shrink by 6.7% per year. That is not a good result. The yearly loss of 10% over three years isn't too bad in the scheme of things. The broader market sell-off would have weighed on the stock. We'd need to get more comfortable that the company will trend towards profitability, before getting considering a purchase.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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, D&G Technology Holding shareholders did even worse, losing 31%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% 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. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for D&G Technology Holding you should know about.

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 Hong Kong 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.