The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Traffic Control Technology Co., Ltd. (SHSE:688015) shareholders over the last year, as the share price declined 27%. That contrasts poorly with the market decline of 15%. We wouldn't rush to judgement on Traffic Control Technology because we don't have a long term history to look at. The share price has dropped 32% in three months. But this could be related to the weak market, which is down 15% in the same period.

If the past week is anything to go by, investor sentiment for Traffic Control Technology isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Traffic Control Technology

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 Traffic Control Technology share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.

It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's easy to justify a look at some other metrics.

Traffic Control Technology managed to grow revenue over the last year, which is usually a real positive. 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 Traffic Control Technology has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Traffic Control Technology's financial health with this free report on its balance sheet.

A Different Perspective

We doubt Traffic Control Technology shareholders are happy with the loss of 26% over twelve months (even including dividends). That falls short of the market, which lost 15%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. It's worth noting that the last three months did the real damage, with a 32% decline. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 4 warning signs for Traffic Control Technology (1 is concerning!) that you should be aware of before investing here.

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 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.