China First Heavy Industries (SHSE:601106 investor three-year losses grow to 12% as the stock sheds CN¥1.7b this past week

Many investors define successful investing as beating the market average over the long term. But if you try your hand at stock picking, you risk returning less than the market. Unfortunately, that's been the case for longer term China First Heavy Industries (SHSE:601106) shareholders, since the share price is down 12% in the last three years, falling well short of the market decline of around 1.5%. On top of that, the share price is down 8.3% in the last week.

After losing 8.3% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

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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 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.

China First Heavy Industries saw its share price decline over the three years in which its EPS also dropped, falling to a loss. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

China First Heavy Industries shareholders are up 2.2% for the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 1.0% over half a decade This suggests the company might be improving over time. You could get a better understanding of China First Heavy Industries' growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

We will like China First Heavy Industries better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider 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.