Investors can approximate the average market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in Shanghai Foreign Service Holding Group CO.,Ltd. (SHSE:600662) have tasted that bitter downside in the last year, as the share price dropped 34%. That contrasts poorly with the market decline of 13%. However, the longer term returns haven't been so bad, with the stock down 8.2% in the last three years. Shareholders have had an even rougher run lately, with the share price down 18% in the last 90 days. But this could be related to the weak market, which is down 14% in the same period.

While the stock has risen 8.0% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

View our latest analysis for Shanghai Foreign Service Holding GroupLtd

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Unfortunately Shanghai Foreign Service Holding GroupLtd reported an EPS drop of 43% for the last year. The share price fall of 34% isn't as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.

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

Dive deeper into Shanghai Foreign Service Holding GroupLtd's key metrics by checking this interactive graph of Shanghai Foreign Service Holding GroupLtd's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Shanghai Foreign Service Holding GroupLtd shareholders are down 34% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 13%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. 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. It's always interesting to track share price performance over the longer term. But to understand Shanghai Foreign Service Holding GroupLtd better, we need to consider many other factors. Even so, be aware that Shanghai Foreign Service Holding GroupLtd is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.