Even after rising 45% this past week, Mabpharm (HKG:2181) shareholders are still down 23% over the past three years

Many investors define successful investing as beating the market average over the long term. But if you try your hand at stock picking, your risk returning less than the market. We regret to report that long term Mabpharm Limited (HKG:2181) shareholders have had that experience, with the share price dropping 23% in three years, versus a market return of about 23%.

The recent uptick of 45% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for Mabpharm

Given that Mabpharm didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

Over three years, Mabpharm grew revenue at 60% per year. That is faster than most pre-profit companies. The share price drop of 7% per year over three years would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. It seems likely that actual growth fell short of shareholders' expectations. Before considering a purchase, investors should consider how quickly expenses are growing, relative to revenue.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

If you are thinking of buying or selling Mabpharm stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Over the last year, Mabpharm shareholders took a loss of 15%. In contrast the market gained about 3.2%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 7% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Mabpharm better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Mabpharm you should be aware of, and 3 of them can't be ignored.

We will like Mabpharm better if we see some big insider buys. While we wait, check out this free list of growing companies 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 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.