Shanghai Mechanical & Electrical IndustryLtd (SHSE:600835) stock falls 5.9% in past week as three-year earnings and shareholder returns continue downward trend

While it may not be enough for some shareholders, we think it is good to see the Shanghai Mechanical & Electrical Industry Co.,Ltd. (SHSE:600835) share price up 11% in a single quarter. But we must note it seems the three year returns are less impressive. To be specific, the share price is a full 21% lower, while the market is down , with a return of (-18%)..

With the stock having lost 5.9% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Shanghai Mechanical & Electrical IndustryLtd

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 Mechanical & Electrical IndustryLtd saw its EPS decline at a compound rate of 8.8% per year, over the last three years. This fall in EPS isn't far from the rate of share price decline, which was 10% per year. So it seems like sentiment towards the stock hasn't changed all that much over time. It seems like the share price is reflecting the declining earnings per share.

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

Dive deeper into Shanghai Mechanical & Electrical IndustryLtd's key metrics by checking this interactive graph of Shanghai Mechanical & Electrical IndustryLtd's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. As it happens, Shanghai Mechanical & Electrical IndustryLtd's TSR for the last 3 years was -21%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

While it's never nice to take a loss, Shanghai Mechanical & Electrical IndustryLtd shareholders can take comfort that , including dividends,their trailing twelve month loss of 1.3% wasn't as bad as the market loss of around 8.2%. Of far more concern is the 1.8% p.a. loss served to shareholders over the last five years. This sort of share price action isn't particularly encouraging, but at least the losses are slowing. It's always interesting to track share price performance over the longer term. But to understand Shanghai Mechanical & Electrical IndustryLtd better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Shanghai Mechanical & Electrical IndustryLtd you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps 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.