Shanghai Kelai Mechatronics EngineeringLtd (SHSE:603960) stock falls 6.8% in past week as three-year earnings and shareholder returns continue downward trend

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term Shanghai Kelai Mechatronics Engineering Co.,Ltd. (SHSE:603960) shareholders, since the share price is down 38% in the last three years, falling well short of the market decline of around 25%. The falls have accelerated recently, with the share price down 33% in the last three months.

With the stock having lost 6.8% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Shanghai Kelai Mechatronics EngineeringLtd

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 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 Kelai Mechatronics EngineeringLtd saw its EPS decline at a compound rate of 11% per year, over the last three years. This reduction in EPS is slower than the 15% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. Having said that, the market is still optimistic, given the P/E ratio of 60.80.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Shanghai Kelai Mechatronics EngineeringLtd's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Shanghai Kelai Mechatronics EngineeringLtd shareholders have received a total shareholder return of 18% over one year. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 1.4% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before deciding if you like the current share price, check how Shanghai Kelai Mechatronics EngineeringLtd scores on these 3 valuation metrics.

Of course Shanghai Kelai Mechatronics EngineeringLtd 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com