Investors three-year losses continue as Zhejiang Southeast Space Frame (SZSE:002135) dips a further 8.3% this week, earnings continue to decline

Many investors define successful investing as beating the market average over the long term. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Zhejiang Southeast Space Frame Co., Ltd. (SZSE:002135) shareholders have had that experience, with the share price dropping 37% in three years, versus a market decline of about 16%. The more recent news is of little comfort, with the share price down 29% in a year. The falls have accelerated recently, with the share price down 21% in the last three months.

With the stock having lost 8.3% 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 Zhejiang Southeast Space Frame

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Zhejiang Southeast Space Frame saw its EPS decline at a compound rate of 21% per year, over the last three years. This fall in the EPS is worse than the 14% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term.

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

This free interactive report on Zhejiang Southeast Space Frame's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 13% in the twelve months, Zhejiang Southeast Space Frame shareholders did even worse, losing 28% (even including dividends). 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Zhejiang Southeast Space Frame is showing 4 warning signs in our investment analysis , and 2 of those are potentially serious...

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.