For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Shanghai @hub Co.,Ltd. (SHSE:603881) shareholders have had that experience, with the share price dropping 24% in three years, versus a market decline of about 15%. And the ride hasn't got any smoother in recent times over the last year, with the price 23% lower in that time. And the share price decline continued over the last week, dropping some 5.3%.

With the stock having lost 5.3% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Shanghai @hubLtd saw its EPS decline at a compound rate of 2.8% per year, over the last three years. This reduction in EPS is slower than the 9% annual reduction in the share price. So it seems the market was too confident about the business, in the past. Of course, with a P/E ratio of 66.44, the market remains optimistic.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It might be well worthwhile taking a look at our free report on Shanghai @hubLtd's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Shanghai @hubLtd shareholders are down 23% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 8.0%. 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. On the bright side, long term shareholders have made money, with a gain of 1.6% 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. Before deciding if you like the current share price, check how Shanghai @hubLtd scores on these 3 valuation metrics.

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.