This week we saw Beijing Forever Technology Co., Ltd (SZSE: 300365) share prices increased by 27%. But that is little comfort to those who have been sitting on big losses for the past half-decade. In fact, the share price has fallen 59% in that time. So we hesitate to put much weight behind short-term gains. However, in the best case scenario (by far Absolute truth), this improved performance can be maintained.

The recent rise of 27% may be a positive sign of things to come, so let’s take a look at the historical fundamentals.

Check out our latest analysis for Beijing Forever Technology

We don’t think Beijing Forever Technology’s meager trailing twelve month returns are the focus of the market right now. We think revenue is probably a better guide. As a general rule, we think this type of company is more comparable to a loss-making stock, because actual profits are much lower. In order to gain the confidence of shareholders, the company’s profitability will increase significantly, it must increase revenue.

Beijing Forever Technology saw its trailing-twelve-month revenue fall by 11 percent annually over half a decade. Which puts him in an unattractive cohort, to put it mildly. Of course, the market has responded appropriately to this business performance by sending the share price down 10% (annualized) over the same period. It is fair to say that most investors do not like to invest in loss-making companies with low earnings. This looks like a really risky stock to buy at first glance.

You can see below how income and earnings have changed over time (click on the image to discover the exact values).

We know that Beijing Forever Technology has improved its bottom line recently, but what does the future hold? This free A report showing an analyst’s forecast Beijing Forever should help you form a theory on technology.

A different perspective

We regret to report that Beijing Forever Technology shareholders are down 12% for the year (even with dividends). Unfortunately, that’s worse than the broader market’s decline of 6.0%. Having said that, it is inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the underlying development. Unfortunately, long-term shareholders are faring worse, having lost 10% over the past five years. We want clear information that the company will grow, before the share price stabilizes. While it’s worth considering the various effects that market conditions can have on share prices, there are other factors that are even more important. Be aware of this though Beijing Forever Technology is showing up. 2 warning signs in our investment analysis you should know about this…

If you’d rather check out another company — one with potentially higher financials — don’t miss out. free A list of companies that have proven they can grow earnings.

Please note, the market return quoted in this article reflects the market-weighted average return of stocks currently traded on Chinese exchanges.

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This article by Simply Wall Saint is of a general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies and our articles are not intended as financial advice. It does not recommend buying or selling any stock, and does not take into account your objectives, or your financial situation. Our goal is to bring you long-term focused analysis based on fundamental data. Note that our analysis may not include the latest company announcements or qualitative content regarding pricing. Simply Wall St has no positions in any of the stocks mentioned.