As an investor its worth striving to ensure your overall portfolio beats the market average. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term Shenzhen Sunshine Laser & Electronics Technology Co., Ltd. (SZSE:300227) shareholders have had that experience, with the share price dropping 31% in three years, versus a market decline of about 11%. The last week also saw the share price slip down another 9.7%. But this could be related to the soft market, which is down about 4.4% in the same period.
Since Shenzhen Sunshine Laser & Electronics Technology has shed CN¥381m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for Shenzhen Sunshine Laser & Electronics Technology
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Shenzhen Sunshine Laser & Electronics Technology saw its EPS decline at a compound rate of 19% per year, over the last three years. In comparison the 12% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 74.36.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It might be well worthwhile taking a look at our free report on Shenzhen Sunshine Laser & Electronics Technology's earnings, revenue and cash flow.
A Different Perspective
We're pleased to report that Shenzhen Sunshine Laser & Electronics Technology shareholders have received a total shareholder return of 2.0% over one year. However, that falls short of the 5% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. 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. Even so, be aware that Shenzhen Sunshine Laser & Electronics Technology is showing 2 warning signs in our investment analysis , you should know about...
If you are like me, then you will not want to miss this free list of growing companies that insiders are 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.