If you love investing in stocks you're bound to buy some losers. But long term Nanhua Futures Co., Ltd. (SHSE:603093) shareholders have had a particularly rough ride in the last three year. So they might be feeling emotional about the 65% share price collapse, in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 22% lower in that time. On the other hand the share price has bounced 7.9% over the last week.

While the stock has risen 7.9% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Nanhua Futures

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...' 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 unfortunate three years of share price decline, Nanhua Futures actually saw its earnings per share (EPS) improve by 9.4% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.

The modest 0.4% dividend yield is unlikely to be guiding the market view of the stock. The company has kept revenue pretty healthy over the last three years, so we doubt that explains the falling share price. We're not entirely sure why the share price is dropped, but it does seem likely investors have become less optimistic about the business.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Nanhua Futures shareholders are down 21% for the year (even including dividends), falling short of the market return. The market shed around 17%, no doubt weighing on the stock price. However, the loss over the last year isn't as bad as the 18% per annum loss investors have suffered over the last three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. Before deciding if you like the current share price, check how Nanhua Futures scores on these 3 valuation metrics.

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.