The five-year shareholder returns and company earnings persist lower as WPG (Shanghai) Smart Water PublicLtd (SHSE:603956) stock falls a further 12% in past week

We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. To wit, the WPG (Shanghai) Smart Water Public Co.,Ltd. (SHSE:603956) share price managed to fall 71% over five long years. That's an unpleasant experience for long term holders. And some of the more recent buyers are probably worried, too, with the stock falling 30% in the last year. Shareholders have had an even rougher run lately, with the share price down 23% in the last 90 days.

After losing 12% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for WPG (Shanghai) Smart Water PublicLtd

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...' 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.

WPG (Shanghai) Smart Water PublicLtd became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics might give us a better handle on how its value is changing over time.

The modest 1.9% dividend yield is unlikely to be guiding the market view of the stock. Revenue is actually up 12% over the time period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

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

If you are thinking of buying or selling WPG (Shanghai) Smart Water PublicLtd stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for WPG (Shanghai) Smart Water PublicLtd the TSR over the last 5 years was -69%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

We regret to report that WPG (Shanghai) Smart Water PublicLtd shareholders are down 29% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 12%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% 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 WPG (Shanghai) Smart Water PublicLtd better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for WPG (Shanghai) Smart Water PublicLtd (of which 2 are a bit unpleasant!) you should know about.

Of course WPG (Shanghai) Smart Water PublicLtd 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.