The nature of investing is that you win some, and you lose some. Unfortunately, shareholders of Lecron Industrial Development Group Co., Ltd. (SZSE:300343) have suffered share price declines over the last year. In that relatively short period, the share price has plunged 65%. Longer term investors have fared much better, since the share price is up 42% in three years. Shareholders have had an even rougher run lately, with the share price down 47% in the last 90 days.
If the past week is anything to go by, investor sentiment for Lecron Industrial Development Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Because Lecron Industrial Development Group 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Lecron Industrial Development Group's revenue didn't grow at all in the last year. In fact, it fell 57%. If you think that's a particularly bad result, you're statistically on the money It's no surprise, then, that investors dumped the stock like it was garbage, sending the share price down 65%. Buying shares in loss making companies with falling revenue is often called speculation, not investing. This company will really need to improve on the numbers before we get excited about it.
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
While the broader market lost about 26% in the twelve months, Lecron Industrial Development Group shareholders did even worse, losing 65%. 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. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Lecron Industrial Development Group better, we need to consider many other factors. For example, we've discovered 1 warning sign for Lecron Industrial Development Group that you should be aware of before investing here.
Of course Lecron Industrial Development Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.