Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the China Railway Construction Heavy Industry Corporation Limited (SHSE:688425) share price slid 38% over twelve months. That contrasts poorly with the market decline of 8.6%. China Railway Construction Heavy Industry may have better days ahead, of course; we've only looked at a one year period.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

View our latest analysis for China Railway Construction Heavy Industry

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Unhappily, China Railway Construction Heavy Industry had to report a 22% decline in EPS over the last year. The share price decline of 38% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

This free interactive report on China Railway Construction Heavy Industry's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

China Railway Construction Heavy Industry shareholders are down 37% for the year (even including dividends), even worse than the market loss of 8.6%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 6.8% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand China Railway Construction Heavy Industry better, we need to consider many other factors. Even so, be aware that China Railway Construction Heavy Industry is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

We will like China Railway Construction Heavy Industry better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CN 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.