The past three years for AVIC Airborne Systems (SHSE:600372) investors has not been profitable

While not a mind-blowing move, it is good to see that the AVIC Airborne Systems Co., Ltd. (SHSE:600372) share price has gained 20% in the last three months. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 35% in the last three years, significantly under-performing the market.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for AVIC Airborne Systems

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 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).

AVIC Airborne Systems saw its EPS decline at a compound rate of 12% per year, over the last three years. This change in EPS is reasonably close to the 14% average annual decrease in the share price. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. In this case, it seems that the EPS is guiding the share price.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of AVIC Airborne Systems' earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 12% in the last year, AVIC Airborne Systems shareholders lost 1.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 1.8% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. Before deciding if you like the current share price, check how AVIC Airborne Systems scores on these 3 valuation metrics.

Of course AVIC Airborne Systems 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.