It's normal to be annoyed when stock you own has a declining share price. But in the short term the market is a voting machine, and the share price movements may not reflect the underlying business performance. Over the year the Bank of Guizhou Co., Ltd. (HKG:6199) share price fell 12%. However, that's better than the market's overall decline of 19%. Bank of Guizhou hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time.

While the last year has been tough for Bank of Guizhou 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 Guizhou

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Even though the Bank of Guizhou share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.

It seems quite likely that the market was expecting higher growth from the stock. But other metrics might shed some light on why the share price is down.

Revenue was pretty flat on last year, which isn't too bad. However, it is certainly possible the market was expecting an uptick in revenue, and that the share price fall reflects that disappointment.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

Given that the broader market dropped 19% over the year, the fact that Bank of Guizhou shareholders were down 12% isn't so bad. Unfortunately for shareholders, the share price momentum hasn't improved much with the stock down 1.9% in around 90 days. Momentum traders would generally avoid a stock if the share price is in a downtrend. We prefer keep an eye on the trends in business metrics like revenue or EPS. It's always interesting to track share price performance over the longer term. But to understand Bank of Guizhou better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Bank of Guizhou (including 1 which is a bit concerning) .

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.