Stock pickers are generally looking for stocks that will outperform the broader market. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, long term Shenyang Yuanda Intellectual Industry Group Co.,Ltd (SZSE:002689) shareholders have enjoyed a 35% share price rise over the last half decade, well in excess of the market return of around 24% (not including dividends).
Since the long term performance has been good but there's been a recent pullback of 8.7%, let's check if the fundamentals match the share price.
View our latest analysis for Shenyang Yuanda Intellectual Industry GroupLtd
Given that Shenyang Yuanda Intellectual Industry GroupLtd didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 half decade Shenyang Yuanda Intellectual Industry GroupLtd's revenue has actually been trending down at about 5.8% per year. Despite the lack of revenue growth, the stock has returned a respectable 6%, compound, over that time. To us that suggests that there probably isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Although it hurts that Shenyang Yuanda Intellectual Industry GroupLtd returned a loss of 4.3% in the last twelve months, the broader market was actually worse, returning a loss of 5.9%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 6% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. 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 Shenyang Yuanda Intellectual Industry GroupLtd (1 is concerning) that you should be aware of.
We will like Shenyang Yuanda Intellectual Industry GroupLtd better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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.