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. Unfortunately the Henan Qingshuiyuan Technology CO.,Ltd (SZSE:300437) share price slid 32% over twelve months. That falls noticeably short of the market return of around 10%. Longer term investors have fared much better, since the share price is up 31% in three years. Furthermore, it's down 24% in about a quarter. That's not much fun for holders. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

Since Henan Qingshuiyuan TechnologyLtd has shed CN¥573m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Henan Qingshuiyuan TechnologyLtd

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Henan Qingshuiyuan TechnologyLtd fell to a loss making position during the year. While this may prove temporary, we'd consider it a negative, so it doesn't surprise us that the stock price is down. We hope for shareholders' sake that the company becomes profitable again soon.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Henan Qingshuiyuan TechnologyLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 10% in the last year, Henan Qingshuiyuan TechnologyLtd shareholders lost 32% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Henan Qingshuiyuan TechnologyLtd better, we need to consider many other factors. Take risks, for example - Henan Qingshuiyuan TechnologyLtd has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

We will like Henan Qingshuiyuan TechnologyLtd better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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