These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. By comparison, an individual stock is unlikely to match market returns - and could well fall short. One such example is East China Engineering Science and Technology Co., Ltd. (SZSE:002140), which saw its share price fall 17% over a year, against a market decline of 14%. On the bright side, the stock is actually up 12% in the last three years. On the other hand the share price has bounced 9.1% over the last week. We would posit that the recently released financial results have driven this rise, so you might want to check the latest numbers in our full company report.

On a more encouraging note the company has added CN¥481m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 East China Engineering Science and Technology reported an EPS drop of 5.0% for the last year. This reduction in EPS is not as bad as the 17% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business.

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

Dive deeper into East China Engineering Science and Technology's key metrics by checking this interactive graph of East China Engineering Science and Technology's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 14% in the twelve months, East China Engineering Science and Technology shareholders did even worse, losing 16% (even including dividends). 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 3% per year over half a decade. 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 East China Engineering Science and Technology better, we need to consider many other factors. For example, we've discovered 1 warning sign for East China Engineering Science and Technology that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.