It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the SHENZHEN TOPRAYSOLAR Co.,Ltd. (SZSE:002218) share price slid 31% over twelve months. That's disappointing when you consider the market declined 20%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 22% in three years. Furthermore, it's down 20% in about a quarter. That's not much fun for holders.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
There is no denying that markets are sometimes efficient, but prices do not always reflect 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 SHENZHEN TOPRAYSOLARLtd reported an EPS drop of 58% for the last year. The share price fall of 31% isn't as bad as the reduction in earnings per share. It may have been that the weak EPS was not as bad as some had feared. Indeed, with a P/E ratio of 97.94 there is obviously some real optimism that earnings will bounce back.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into SHENZHEN TOPRAYSOLARLtd's key metrics by checking this interactive graph of SHENZHEN TOPRAYSOLARLtd's earnings, revenue and cash flow.
A Different Perspective
While the broader market lost about 20% in the twelve months, SHENZHEN TOPRAYSOLARLtd shareholders did even worse, losing 31% (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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.5% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Even so, be aware that SHENZHEN TOPRAYSOLARLtd is showing 4 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...
But note: SHENZHEN TOPRAYSOLARLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.