It's nice to see the Shanghai Laimu Electronics Co.,Ltd. (SHSE:603633) share price up 13% in a week. But that doesn't change the fact that the returns over the last year have been less than pleasing. In fact the stock is down 29% in the last year, well below the market return.

On a more encouraging note the company has added CN¥367m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unhappily, Shanghai Laimu ElectronicsLtd had to report a 3.4% decline in EPS over the last year. The share price decline of 29% 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).

It might be well worthwhile taking a look at our free report on Shanghai Laimu ElectronicsLtd's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Shanghai Laimu ElectronicsLtd shareholders are down 29% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 17%. 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 6%, 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. For instance, we've identified 2 warning signs for Shanghai Laimu ElectronicsLtd (1 is a bit unpleasant) 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 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.