Further weakness as Zhejiang Shapuaisi PharmaceuticalLtd (SHSE:603168) drops 11% this week, taking one-year losses to 54%

Zhejiang Shapuaisi Pharmaceutical Co.,Ltd. (SHSE:603168) shareholders should be happy to see the share price up 15% in the last month. But that doesn't change the fact that the returns over the last year have been disappointing. Specifically, the stock price slipped by 54% in that time. So the bounce should be viewed in that context. Arguably, the fall was overdone.

With the stock having lost 11% 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 Zhejiang Shapuaisi PharmaceuticalLtd

Given that Zhejiang Shapuaisi PharmaceuticalLtd 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In just one year Zhejiang Shapuaisi PharmaceuticalLtd saw its revenue fall by 12%. That's not what investors generally want to see. The share price drop of 54% is understandable given the company doesn't have profits to boast of. Fingers crossed this is the low ebb for the stock. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.

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

This free interactive report on Zhejiang Shapuaisi PharmaceuticalLtd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that Zhejiang Shapuaisi PharmaceuticalLtd shareholders are down 54% 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2% 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. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.