Investors five-year losses continue as Zhuzhou Tianqiao Crane (SZSE:002523) dips a further 9.9% this week, earnings continue to decline

Ideally, your overall portfolio should beat the market average. But every investor is virtually certain to have both over-performing and under-performing stocks. So we wouldn't blame long term Zhuzhou Tianqiao Crane Co., Ltd. (SZSE:002523) shareholders for doubting their decision to hold, with the stock down 31% over a half decade. Shareholders have had an even rougher run lately, with the share price down 23% in the last 90 days.

Since Zhuzhou Tianqiao Crane has shed CN¥382m 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 Zhuzhou Tianqiao Crane

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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).

Looking back five years, both Zhuzhou Tianqiao Crane's share price and EPS declined; the latter at a rate of 22% per year. The share price decline of 7% per year isn't as bad as the EPS decline. So the market may previously have expected a drop, or else it expects the situation will improve. The high P/E ratio of 92.46 suggests that shareholders believe earnings will grow in the years ahead.

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 Zhuzhou Tianqiao Crane's key metrics by checking this interactive graph of Zhuzhou Tianqiao Crane's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Zhuzhou Tianqiao Crane's TSR for the last 5 years was -28%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Although it hurts that Zhuzhou Tianqiao Crane returned a loss of 8.4% in the last twelve months, the broader market was actually worse, returning a loss of 12%. Given the total loss of 5% per year over five years, it seems returns have deteriorated in the last twelve months. Whilst Baron Rothschild does tell the investor "buy when there's blood in the streets, even if the blood is your own", buyers would need to examine the data carefully to be comfortable that the business itself is sound. 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. For example, we've discovered 2 warning signs for Zhuzhou Tianqiao Crane (1 is potentially serious!) that you should be aware of before investing here.

But note: Zhuzhou Tianqiao Crane may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.