In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But even the best stock picker will only win with some selections. So we wouldn't blame long term Houpu Clean Energy Group Co., Ltd. (SZSE:300471) shareholders for doubting their decision to hold, with the stock down 45% over a half decade. And it's not just long term holders hurting, because the stock is down 39% in the last year. Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days.

Since Houpu Clean Energy Group has shed CN¥477m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Because Houpu Clean Energy 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.

In the last half decade, Houpu Clean Energy Group saw its revenue increase by 18% per year. That's better than most loss-making companies. Shareholders are no doubt disappointed with the loss of 8%, each year, in that time. So you might argue the Houpu Clean Energy Group should get more credit for its rather impressive revenue growth over the period. If that's the case, now might be the smart time to take a close look at it.

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 Houpu Clean Energy Group's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that Houpu Clean Energy Group shareholders are down 39% for the year. Unfortunately, that's worse than the broader market decline of 17%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Houpu Clean Energy Group that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.