Shandong Fengxiang Co., Ltd (HKG:9977) shareholders are doubtless heartened to see the share price bounce 49% in just one week. But that is minimal compensation for the share price under-performance over the last year. The cold reality is that the stock has dropped 37% in one year, under-performing the market.

On a more encouraging note the company has added CN¥560m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

See our latest analysis for Shandong Fengxiang

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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).

During the last year Shandong Fengxiang grew its earnings per share, moving from a loss to a profit.

The result looks like a strong improvement to us, so we're surprised the market has sold down the shares. If the company can sustain the earnings growth, this might be an inflection point for the business, which would make right now a really interesting time to study it more closely.

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

It might be well worthwhile taking a look at our free report on Shandong Fengxiang's earnings, revenue and cash flow.

A Different Perspective

We doubt Shandong Fengxiang shareholders are happy with the loss of 37% over twelve months. That falls short of the market, which lost 21%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 6.2% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Shandong Fengxiang better, we need to consider many other factors. Take risks, for example - Shandong Fengxiang has 2 warning signs we think you should be aware of.

Of course Shandong Fengxiang 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 HK 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.