Investing in stocks comes with the risk that the share price will fall. And unfortunately for Foshan Yowant Technology Co.,Ltd (SZSE:002291) shareholders, the stock is a lot lower today than it was a year ago. The share price has slid 65% in that time. We note that it has not been easy for shareholders over three years, either; the share price is down 65% in that time. Furthermore, it's down 48% in about a quarter. That's not much fun for holders. But this could be related to the weak market, which is down 21% in the same period.
Since Foshan Yowant TechnologyLtd has shed CN¥1.6b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Given that Foshan Yowant TechnologyLtd 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. Shareholders of unprofitable companies usually expect strong 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 twelve months, Foshan Yowant TechnologyLtd increased its revenue by 3.2%. While that may seem decent it isn't great considering the company is still making a loss. It's likely this muted growth has contributed to the share price decline of 65% in the last year. We'd want to see evidence that future revenue growth will be stronger before getting too interested. When a stock falls hard like this, it can signal an over-reaction. Our preference is to wait for a fundamental improvements before buying, but now could be a good time for some research.
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 Foshan Yowant TechnologyLtd's financial health with this free report on its balance sheet.
A Different Perspective
We regret to report that Foshan Yowant TechnologyLtd shareholders are down 65% for the year. Unfortunately, that's worse than the broader market decline of 28%. 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. 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 Foshan Yowant TechnologyLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Foshan Yowant TechnologyLtd , and understanding them should be part of your investment process.
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.