The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Shandong Chenming Paper Holdings Limited (SZSE:000488) have had an unfortunate run in the last three years. Unfortunately, they have held through a 65% decline in the share price in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 36% lower in that time. Shareholders have had an even rougher run lately, with the share price down 14% in the last 90 days.

With the stock having lost 4.5% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Shandong Chenming Paper Holdings 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. Shareholders of unprofitable companies usually expect strong 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.

Over the last three years, Shandong Chenming Paper Holdings' revenue dropped 4.9% per year. That is not a good result. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 18% per year. Of course, it's the future that will determine whether today's price is a good one. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.

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 Shandong Chenming Paper Holdings stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Shandong Chenming Paper Holdings shareholders are down 36% for the year. Unfortunately, that's worse than the broader market decline of 16%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8% 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. It's always interesting to track share price performance over the longer term. But to understand Shandong Chenming Paper Holdings better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Shandong Chenming Paper Holdings you should be aware of.

But note: Shandong Chenming Paper Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.