Generally speaking long term investing is the way to go. But that doesn't mean long term investors can avoid big losses. For example the CSG Smart Science&Technology Co.,Ltd. (SZSE:300222) share price dropped 66% over five years. That is extremely sub-optimal, to say the least. We also note that the stock has performed poorly over the last year, with the share price down 24%. More recently, the share price has dropped a further 18% in a month. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
Since CSG Smart Science&TechnologyLtd has shed CN¥398m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Because CSG Smart Science&TechnologyLtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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 half decade, CSG Smart Science&TechnologyLtd saw its revenue increase by 2.8% per year. That's far from impressive given all the money it is losing. This lacklustre growth has no doubt fueled the loss of 11% per year, in that time. We want to see an acceleration of revenue growth (or profits) before showing much interest in this one. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term).
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at CSG Smart Science&TechnologyLtd's financial health with this free report on its balance sheet.
A Different Perspective
We regret to report that CSG Smart Science&TechnologyLtd shareholders are down 24% for the year. Unfortunately, that's worse than the broader market decline of 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% 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. It's always interesting to track share price performance over the longer term. But to understand CSG Smart Science&TechnologyLtd better, we need to consider many other factors. For example, we've discovered 1 warning sign for CSG Smart Science&TechnologyLtd that you should be aware of before investing here.
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.