You can invest in an index fund if you want to make sure your returns approximately match the overall market. But in any given year a good portion of stocks will fall short of that. Unfortunately for investors in COFCO Joycome Foods Limited (HKG:1610), the share price has slipped 31% in three years, falling short of the marketdecline of 20%. And the share price decline continued over the last week, dropping some 10%.

Since COFCO Joycome Foods has shed HK$916m 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 COFCO Joycome Foods

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).

COFCO Joycome Foods became profitable within the last five years. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.

Arguably the revenue decline of 14% per year has people thinking COFCO Joycome Foods is shrinking. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We know that COFCO Joycome Foods has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think COFCO Joycome Foods will earn in the future (free profit forecasts).

A Dividend Lost

The share price return figures discussed above don't include the value of dividends paid previously, but the total shareholder return (TSR) does. By accounting for the value of dividends paid, the TSR can be seen as a more complete measure of the value a company brings to its shareholders. Over the last 3 years, COFCO Joycome Foods generated a TSR of -22%, which is, of course, better than the share price return. Although the company had to cut dividends, it has paid cash to shareholders in the past.

A Different Perspective

We regret to report that COFCO Joycome Foods shareholders are down 20% for the year. Unfortunately, that's worse than the broader market decline of 9.3%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 8%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand COFCO Joycome Foods better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for COFCO Joycome Foods you should be aware of.

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