Investors five-year losses continue as Nanfang Zhongjin Environment (SZSE:300145) dips a further 6.7% this week, earnings continue to decline

While not a mind-blowing move, it is good to see that the Nanfang Zhongjin Environment Co., Ltd. (SZSE:300145) share price has gained 12% in the last three months. But if you look at the last five years the returns have not been good. After all, the share price is down 40% in that time, significantly under-performing the market.

With the stock having lost 6.7% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Nanfang Zhongjin Environment

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Nanfang Zhongjin Environment moved from a loss to profitability. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.

Revenue is actually up 7.6% over the time period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

It is of course excellent to see how Nanfang Zhongjin Environment has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Although it hurts that Nanfang Zhongjin Environment returned a loss of 5.8% in the last twelve months, the broader market was actually worse, returning a loss of 8.9%. What is more upsetting is the 7% per annum loss investors have suffered over the last half decade. This sort of share price action isn't particularly encouraging, but at least the losses are slowing. 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. For example, we've discovered 1 warning sign for Nanfang Zhongjin Environment that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.