Investors three-year losses continue as FAWER Automotive Parts Limited (SZSE:000030) dips a further 6.2% this week, earnings continue to decline

While not a mind-blowing move, it is good to see that the FAWER Automotive Parts Limited Company (SZSE:000030) share price has gained 13% in the last three months. But that doesn't help the fact that the three year return is less impressive. Truth be told the share price declined 28% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

If the past week is anything to go by, investor sentiment for FAWER Automotive Parts Limited isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for FAWER Automotive Parts Limited

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).

FAWER Automotive Parts Limited saw its EPS decline at a compound rate of 7.6% per year, over the last three years. The share price decline of 10% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It might be well worthwhile taking a look at our free report on FAWER Automotive Parts Limited's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of FAWER Automotive Parts Limited, it has a TSR of -17% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

FAWER Automotive Parts Limited shareholders are down 8.7% for the year (even including dividends), but the market itself is up 6.2%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 8% 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. It's always interesting to track share price performance over the longer term. But to understand FAWER Automotive Parts Limited better, we need to consider many other factors. Take risks, for example - FAWER Automotive Parts Limited has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

Of course FAWER Automotive Parts Limited may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.