Shandong Iron and Steel Company Ltd. (SHSE:600022) shareholders should be happy to see the share price up 15% in the last month. But that doesn't change the fact that the returns over the last three years have been less than pleasing. Truth be told the share price declined 29% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.
If the past week is anything to go by, investor sentiment for Shandong Iron and Steel isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Shandong Iron and Steel 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 would hope for good top-line growth to make up for the lack of earnings.
