Further weakness as LianChuang Electronic TechnologyLtd (SZSE:002036) drops 9.8% this week, taking three-year losses to 50%

Simply Wall St · 10/15 23:51

Over the last month the LianChuang Electronic Technology Co.,Ltd (SZSE:002036) has been much stronger than before, rebounding by 30%. Meanwhile over the last three years the stock has dropped hard. In that time, the share price dropped 50%. So the improvement may be a real relief to some. Perhaps the company has turned over a new leaf.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Check out our latest analysis for LianChuang Electronic TechnologyLtd

LianChuang Electronic TechnologyLtd wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years, LianChuang Electronic TechnologyLtd saw its revenue grow by 1.4% per year, compound. That's not a very high growth rate considering it doesn't make profits. It's likely this weak growth has contributed to an annualised return of 15% for the last three years. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). After all, growing a business isn't easy, and the process will not always be smooth.

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

earnings-and-revenue-growth
SZSE:002036 Earnings and Revenue Growth October 15th 2024

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While the broader market lost about 0.6% in the twelve months, LianChuang Electronic TechnologyLtd shareholders did even worse, losing 15%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. For instance, we've identified 2 warning signs for LianChuang Electronic TechnologyLtd (1 is significant) that you should be aware of.

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.