The three-year shareholder returns and company earnings persist lower as Hefei Fengle SeedLtd (SZSE:000713) stock falls a further 8.6% in past week

While it may not be enough for some shareholders, we think it is good to see the Hefei Fengle Seed Co.,Ltd (SZSE:000713) share price up 16% in a single quarter. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 34% in the last three years, significantly under-performing the market.

Since Hefei Fengle SeedLtd has shed CN¥356m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Hefei Fengle SeedLtd

Given that Hefei Fengle SeedLtd only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. 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.

Over three years, Hefei Fengle SeedLtd grew revenue at 7.9% per year. Given it's losing money in pursuit of growth, we are not really impressed with that. The stock dropped 10% during that time. Shareholders will probably be hoping growth picks up soon. But ultimately the key will be whether the company can become profitability.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

A Different Perspective

We regret to report that Hefei Fengle SeedLtd shareholders are down 30% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 0.6%. 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. On the bright side, long term shareholders have made money, with a gain of 0.6% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Hefei Fengle SeedLtd , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.