The one-year shareholder returns and company earnings persist lower as Yantai Zhenghai Magnetic Material (SZSE:300224) stock falls a further 6.2% in past week

It's easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Yantai Zhenghai Magnetic Material Co., Ltd. (SZSE:300224) shareholders over the last year, as the share price declined 35%. That contrasts poorly with the market decline of 15%. To make matters worse, the returns over three years have also been really disappointing (the share price is 33% lower than three years ago). The falls have accelerated recently, with the share price down 21% in the last three months.

With the stock having lost 6.2% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Yantai Zhenghai Magnetic Material

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

Unfortunately Yantai Zhenghai Magnetic Material reported an EPS drop of 3.7% for the last year. This reduction in EPS is not as bad as the 35% share price fall. This suggests the EPS fall has made some shareholders more nervous about the business.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Yantai Zhenghai Magnetic Material has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We regret to report that Yantai Zhenghai Magnetic Material shareholders are down 33% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 15%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 5% 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. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Yantai Zhenghai Magnetic Material you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com