Shanghai Hugong Electric Group Co.,Ltd. (SHSE:603131) shareholders will doubtless be very grateful to see the share price up 32% in the last month. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 24% in the last three years, falling well short of the market return.
The recent uptick of 9.7% could be a positive sign of things to come, so let's take a look at historical fundamentals.
View our latest analysis for Shanghai Hugong Electric GroupLtd
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
We know that Shanghai Hugong Electric GroupLtd has been profitable in the past. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. Other metrics might give us a better handle on how its value is changing over time.
We think that the revenue decline over three years, at a rate of 9.9% per year, probably had some shareholders looking to sell. After all, if revenue keeps shrinking, it may be difficult to find earnings growth in the future.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Take a more thorough look at Shanghai Hugong Electric GroupLtd's financial health with this free report on its balance sheet.
Investors in Shanghai Hugong Electric GroupLtd had a tough year, with a total loss of 3.0%, against a market gain of about 6.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Shanghai Hugong Electric GroupLtd better, we need to consider many other factors. For instance, we've identified 1 warning sign for Shanghai Hugong Electric GroupLtd that you should be aware of.
Of course Shanghai Hugong Electric GroupLtd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.