The one-year underlying earnings growth at Guangzhou Tech-Long Packaging MachineryLtd (SZSE:002209) is promising, but the shareholders are still in the red over that time

Investors can approximate the average 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 Guangzhou Tech-Long Packaging Machinery Co.,Ltd. (SZSE:002209) share price slid 20% over twelve months. That's well below the market decline of 10%. The silver lining (for longer term investors) is that the stock is still 4.3% higher than it was three years ago. It's down 23% in about a quarter.

Since Guangzhou Tech-Long Packaging MachineryLtd has shed CN¥247m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Guangzhou Tech-Long Packaging MachineryLtd

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.

Guangzhou Tech-Long Packaging MachineryLtd stole the show with its EPS rocketing, in the last year. We don't think the growth guide to the sustainable growth rate in this case, but we do think this sort of increase is impressive. As a result, we're surprised to see the weak share price. Some different data might shed some more light on the situation.

With a low yield of 0.3% we doubt that the dividend influences the share price much. Guangzhou Tech-Long Packaging MachineryLtd managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

While the broader market lost about 10% in the twelve months, Guangzhou Tech-Long Packaging MachineryLtd shareholders did even worse, losing 20% (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. On the bright side, long term shareholders have made money, with a gain of 0.7% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Guangzhou Tech-Long Packaging MachineryLtd better, we need to consider many other factors. Even so, be aware that Guangzhou Tech-Long Packaging MachineryLtd is showing 1 warning sign in our investment analysis , you should know about...

Of course Guangzhou Tech-Long Packaging MachineryLtd 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.