The three-year shareholder returns and company earnings persist lower as Zhejiang Southeast Space Frame (SZSE:002135) stock falls a further 9.7% in past week

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Zhejiang Southeast Space Frame Co., Ltd. (SZSE:002135) have had an unfortunate run in the last three years. Sadly for them, the share price is down 68% in that time. And more recent buyers are having a tough time too, with a drop of 27% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 23% in thirty days.

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 Zhejiang Southeast Space Frame

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During the three years that the share price fell, Zhejiang Southeast Space Frame's earnings per share (EPS) dropped by 25% each year. This reduction in EPS is slower than the 32% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

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

Dive deeper into Zhejiang Southeast Space Frame's key metrics by checking this interactive graph of Zhejiang Southeast Space Frame's earnings, revenue and cash flow.

A Different Perspective

Zhejiang Southeast Space Frame shareholders are down 25% for the year (even including dividends), but the market itself is up 6.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Zhejiang Southeast Space Frame you should be aware of, and 2 of them are significant.

Of course Zhejiang Southeast Space Frame 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.