The three-year shareholder returns and company earnings persist lower as Xizi Clean Energy Equipment Manufacturing (SZSE:002534) stock falls a further 4.7% in past week

While not a mind-blowing move, it is good to see that the Xizi Clean Energy Equipment Manufacturing Co., Ltd. (SZSE:002534) share price has gained 20% in the last three months. But that doesn't change the fact that the returns over the last three years have been disappointing. Tragically, the share price declined 54% in that time. So the improvement may be a real relief to some. The rise has some hopeful, but turnarounds are often precarious.

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 Xizi Clean Energy Equipment Manufacturing

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).

During the three years that the share price fell, Xizi Clean Energy Equipment Manufacturing's earnings per share (EPS) dropped by 2.7% each year. The share price decline of 23% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Xizi Clean Energy Equipment Manufacturing has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

A Different Perspective

Investors in Xizi Clean Energy Equipment Manufacturing had a tough year, with a total loss of 11% (including dividends), against a market gain of about 5.3%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 11%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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 1 warning sign for Xizi Clean Energy Equipment Manufacturing you should be aware of.

But note: Xizi Clean Energy Equipment Manufacturing 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.