By buying an index fund, investors can approximate the average market return. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, ZYF Lopsking Aluminum Co., Ltd. (SZSE:002333) shareholders have seen the share price rise 30% over three years, well in excess of the market decline (20%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 21%.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
Check out our latest analysis for ZYF Lopsking Aluminum
Given that ZYF Lopsking Aluminum only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Over the last three years ZYF Lopsking Aluminum has grown its revenue at 20% annually. That's much better than most loss-making companies. While the compound gain of 9% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at ZYF Lopsking Aluminum. If the company is trending towards profitability then it could be very interesting.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at ZYF Lopsking Aluminum's financial health with this free report on its balance sheet.
A Different Perspective
It's good to see that ZYF Lopsking Aluminum has rewarded shareholders with a total shareholder return of 21% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 3% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Even so, be aware that ZYF Lopsking Aluminum is showing 2 warning signs in our investment analysis , you should know about...
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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.