Many investors define successful investing as beating the market average over the long term. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Shanghai Emperor of Cleaning Hi-Tech Co., Ltd (SHSE:603200) shareholders have had that experience, with the share price dropping 14% in three years, versus a market return of about 17%. On top of that, the share price is down 16% in the last week. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

With the stock having lost 16% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Shanghai Emperor of Cleaning Hi-Tech

There is no denying that markets are sometimes efficient, but prices do not always reflect 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).

During the three years that the share price fell, Shanghai Emperor of Cleaning Hi-Tech's earnings per share (EPS) dropped by 19% each year. This fall in the EPS is worse than the 5% compound annual share price fall. 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 50.41.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

This free interactive report on Shanghai Emperor of Cleaning Hi-Tech's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Shanghai Emperor of Cleaning Hi-Tech shareholders have gained 3.9% (in total) over the last year. That's including the dividend. That certainly beats the loss of about 4% per year over three years. The optimist would say this is evidence that the stock has bottomed, and better days lie ahead. 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. To that end, you should learn about the 2 warning signs we've spotted with Shanghai Emperor of Cleaning Hi-Tech (including 1 which is a bit concerning) .

If you are like me, then you will not want to miss this free list of growing companies that insiders are 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.