As an investor its worth striving to ensure your overall portfolio beats the market average. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term Shenzhen Hepalink Pharmaceutical Group Co., Ltd. (SZSE:002399) shareholders, since the share price is down 25% in the last three years, falling well short of the market return of around 25%. Shareholders have had an even rougher run lately, with the share price down 14% in the last 90 days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

If the past week is anything to go by, investor sentiment for Shenzhen Hepalink Pharmaceutical Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Shenzhen Hepalink Pharmaceutical Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Shenzhen Hepalink Pharmaceutical Group saw its EPS decline at a compound rate of 27% per year, over the last three years. In comparison the 9% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 55.00.

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

This free interactive report on Shenzhen Hepalink Pharmaceutical Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Shenzhen Hepalink Pharmaceutical Group shareholders may not have made money over the last year, but their total loss of 2.7% ( including dividends) isn't as bad as the market loss of around 2.7%. The one-year return is also not as bad as the 7% per annum loss investors have suffered over the last three years. It could well be that the business has begun to stabilize, though the recent returns are hardly impressive. 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 instance, we've identified 2 warning signs for Shenzhen Hepalink Pharmaceutical Group that you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.