For many investors, the main point of stock picking is to generate higher returns than the overall market. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Eternal Asia Supply Chain Management Ltd. (SZSE:002183) shareholders have had that experience, with the share price dropping 44% in three years, versus a market return of about 7.4%.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

While Eternal Asia Supply Chain Management made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over three years, Eternal Asia Supply Chain Management grew revenue at 5.4% per year. Given it's losing money in pursuit of growth, we are not really impressed with that. The stock dropped 13% during that time. If revenue growth accelerates, we might see the share price bounce. But the real upside for shareholders will be if the company can start generating profits.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at Eternal Asia Supply Chain Management's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Eternal Asia Supply Chain Management shareholders have received a total shareholder return of 37% over the last year. That's including the dividend. That gain is better than the annual TSR over five years, which is 0.5%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Eternal Asia Supply Chain Management better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Eternal Asia Supply Chain Management you should be aware of, and 2 of them don't sit too well with us.

But note: Eternal Asia Supply Chain Management 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.