It's nice to see the Suzhou Dongshan Precision Manufacturing Co., Ltd. (SZSE:002384) share price up 13% in a week. But that isn't much consolation to those who have suffered through the declines of the last year. Like an arid lake in a warming world, shareholder value has evaporated, with the share price down 53% in that time. So the bounce should be viewed in that context. It may be that the fall was an overreaction.

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.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unhappily, Suzhou Dongshan Precision Manufacturing had to report a 4.6% decline in EPS over the last year. The share price decline of 53% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 11.11.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that Suzhou Dongshan Precision Manufacturing has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Suzhou Dongshan Precision Manufacturing stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Suzhou Dongshan Precision Manufacturing shareholders are down 53% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 22%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 1.5% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Suzhou Dongshan Precision Manufacturing you should know about.

We will like Suzhou Dongshan Precision Manufacturing 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.