While China Carbon Neutral Development Group (HKG:1372) shareholders have made 358% in 1 year, increasing losses might now be front of mind as stock sheds 10% this week

The China Carbon Neutral Development Group Limited (HKG:1372) share price has had a bad week, falling 10%. But that doesn't change the fact that the returns over the last year have been spectacular. In that time, shareholders have had the pleasure of a 358% boost to the share price. Arguably, the recent fall is to be expected after such a strong rise. While winners often keep winning, it can pay to be cautious after a strong rise.

In light of the stock dropping 10% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

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China Carbon Neutral Development Group isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year China Carbon Neutral Development Group saw its revenue grow by 18%. We respect that sort of growth, no doubt. But the market is even more excited about it, with the price apparently bound for the moon, up 358% in one of earth's orbits. We're always cautious when the share price is up so much, but there's certainly enough revenue growth to justify taking a closer look at China Carbon Neutral Development Group.

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

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. It might be well worthwhile taking a look at our free report on China Carbon Neutral Development Group's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that China Carbon Neutral Development Group shareholders have received a total shareholder return of 358% over the last year. That gain is better than the annual TSR over five years, which is 9%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand China Carbon Neutral Development Group better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for China Carbon Neutral Development Group you should be aware of, and 2 of them are a bit unpleasant.

China Carbon Neutral Development Group is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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.