Most people feel a little frustrated if a stock they own goes down in price. But often it is not a reflection of the fundamental business performance. The Guangdong Huate Gas Co., Ltd (SHSE:688268) is down 12% over a year, but the total shareholder return is -12% once you include the dividend. That's better than the market which declined 15% over the last year. We wouldn't rush to judgement on Guangdong Huate Gas because we don't have a long term history to look at. The share price has dropped 27% in three months. But this could be related to the weak market, which is down 15% in the same period.

Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.

See our latest analysis for Guangdong Huate Gas

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

Even though the Guangdong Huate Gas share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

The divergence between the EPS and the share price is quite notable, during the year. So it's easy to justify a look at some other metrics.

Given the yield is quite low, at 0.7%, we doubt the dividend can shed much light on the share price. Guangdong Huate Gas' revenue is actually up 30% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We know that Guangdong Huate Gas has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Guangdong Huate Gas in this interactive graph of future profit estimates.

A Different Perspective

While they no doubt would have preferred make a profit, at least Guangdong Huate Gas shareholders didn't do too badly in the last year. Their loss of 12%, including dividends, actually beat the broader market, which lost around 15%. However, the problem arose in the last three months, which saw the share price drop 27%. The recent drop implies that investors are increasingly averse to the stock -- quite possibly due to a deterioration of the business. However, this could create an opportunity if the fundamentals remain strong. 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. Take risks, for example - Guangdong Huate Gas has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

Of course Guangdong Huate Gas may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.