MCC Meili Cloud Computing Industry Investment (SZSE:000815) rallies 34% this week, taking three-year gains to 98%

It hasn’t been the best quarter for MCC Meili Cloud Computing Industry Investment Co., Ltd (SZSE:000815) shareholders, since the share price has fallen 15% in that time. But that shouldn’t obscure the pleasing returns achieved by shareholders over the last three years. In fact, the company’s share price bested the return of its market index in that time, posting a gain of 98%.

Since the stock has added CN¥1.8b to its market cap in the past week alone, let’s see if underlying performance has been driving long-term returns.

View our latest analysis for MCC Meili Cloud Computing Industry Investment

MCC Meili Cloud Computing Industry Investment isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

MCC Meili Cloud Computing Industry Investment actually saw its revenue drop by 3.0% per year over three years. Despite the lack of revenue growth, the stock has returned 25%, compound, over three years. If the company is cutting costs profitability could be on the horizon, but the revenue decline is a prima facie concern.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on MCC Meili Cloud Computing Industry Investment’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 16% in the twelve months, MCC Meili Cloud Computing Industry Investment shareholders did even worse, losing 33%. 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 1.1%, 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. 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. Case in point: We’ve spotted 2 warning signs for MCC Meili Cloud Computing Industry Investment you should be aware of, and 1 of them is a bit concerning.

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.