The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. For example, the COFCO Technology & Industry Co., Ltd. (SZSE:301058) share price is down 24% in the last year. That's disappointing when you consider the market returned 9.5%. COFCO Technology & Industry may have better days ahead, of course; we've only looked at a one year period. On the other hand the share price has bounced 6.6% over the last week. Less than a week ago COFCO Technology & Industry announced its financial results; you can catch up on the most recent data by reading our company report.
Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.
See our latest analysis for COFCO Technology & Industry
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.
Unfortunately COFCO Technology & Industry reported an EPS drop of 13% for the last year. This reduction in EPS is not as bad as the 24% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on COFCO Technology & Industry's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Given that the market gained 9.5% in the last year, COFCO Technology & Industry shareholders might be miffed that they lost 23% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 2.0%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for COFCO Technology & Industry (1 is significant) that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese 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.