We think intelligent long term investing is the way to go. But along the way some stocks are going to perform badly. For example, after five long years the Bank of Zhengzhou Co., Ltd. (HKG:6196) share price is a whole 67% lower. We certainly feel for shareholders who bought near the top. And we doubt long term believers are the only worried holders, since the stock price has declined 21% over the last twelve months. On the other hand the share price has bounced 6.4% over the last week. The buoyant market could have helped drive the share price pop, since stocks are up 4.0% in the same period.

While the last five years has been tough for Bank of Zhengzhou shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Check out our latest analysis for Bank of Zhengzhou

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).

Looking back five years, both Bank of Zhengzhou's share price and EPS declined; the latter at a rate of 29% per year. This fall in the EPS is worse than the 20% compound annual share price fall. So the market may previously have expected a drop, or else it expects the situation will improve.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

This free interactive report on Bank of Zhengzhou's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

We've already covered Bank of Zhengzhou's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Bank of Zhengzhou shareholders, and that cash payout explains why its total shareholder loss of 63%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

Bank of Zhengzhou shareholders are down 21% over twelve months, which isn't far from the market return of -20%. Unfortunately, last year's performance is a deterioration of an already poor long term track record, given the loss of 10% per year over the last five years. It will probably take a substantial improvement in the fundamental performance for the company to reverse this trend. 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 Bank of Zhengzhou (1 doesn't sit too well with us) that you should be aware of.

Of course Bank of Zhengzhou 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 Hong Kong 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.