11% earnings growth over 1 year has not materialized into gains for Nanjing Canatal Data-Centre Environmental Tech (SHSE:603912) shareholders over that period

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Nanjing Canatal Data-Centre Environmental Tech Co., Ltd (SHSE:603912) share price slid 46% over twelve months. That's disappointing when you consider the market declined 12%. At least the damage isn't so bad if you look at the last three years, since the stock is down 25% in that time. The falls have accelerated recently, with the share price down 29% in the last three months.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

View our latest analysis for Nanjing Canatal Data-Centre Environmental Tech

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Even though the Nanjing Canatal Data-Centre Environmental Tech share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past.

The divergence between the EPS and the share price is quite notable, during the year. So it's easy to justify a look at some other metrics.

With a low yield of 1.4% we doubt that the dividend influences the share price much. Nanjing Canatal Data-Centre Environmental Tech managed to grow revenue over the last year, which is usually a real positive. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Nanjing Canatal Data-Centre Environmental Tech's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 12% in the twelve months, Nanjing Canatal Data-Centre Environmental Tech shareholders did even worse, losing 45% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Nanjing Canatal Data-Centre Environmental Tech better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Nanjing Canatal Data-Centre Environmental Tech (at least 2 which are a bit unpleasant) , and understanding them should be part of your investment process.

We will like Nanjing Canatal Data-Centre Environmental Tech 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.