Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Anyone who held China High Speed Transmission Equipment Group Co., Ltd. (HKG:658) for five years would be nursing their metaphorical wounds since the share price dropped 77% in that time. And some of the more recent buyers are probably worried, too, with the stock falling 52% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 28% in thirty days. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.

After losing 22% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for China High Speed Transmission Equipment Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the five years over which the share price declined, China High Speed Transmission Equipment Group's earnings per share (EPS) dropped by 9.3% each year. This reduction in EPS is less than the 25% annual reduction in the share price. This implies that the market is more cautious about the business these days. The low P/E ratio of 6.85 further reflects this reticence.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

This free interactive report on China High Speed Transmission Equipment Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Investors in China High Speed Transmission Equipment Group had a tough year, with a total loss of 52%, against a market gain of about 2.3%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 12% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 China High Speed Transmission Equipment Group (including 1 which can't be ignored) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.