As Shanghai Ganglian E-Commerce Holdings (SZSE:300226) climbs 8.3% this past week, investors may now be noticing the company's five-year earnings growth

We think intelligent long term investing is the way to go. But no-one is immune from buying too high. To wit, the Shanghai Ganglian E-Commerce Holdings Co., Ltd. (SZSE:300226) share price managed to fall 55% over five long years. That's not a lot of fun for true believers. We also note that the stock has performed poorly over the last year, with the share price down 44%. But it's up 8.3% in the last week.

The recent uptick of 8.3% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for Shanghai Ganglian E-Commerce Holdings

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 unfortunate half decade during which the share price slipped, Shanghai Ganglian E-Commerce Holdings actually saw its earnings per share (EPS) improve by 5.9% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.

Due to the lack of correlation between the EPS growth and the falling share price, it's worth taking a look at other metrics to try to understand the share price movement.

We don't think that the 0.5% is big factor in the share price, since it's quite small, as dividends go. Arguably, the revenue drop of 4.5% a year for half a decade suggests that the company can't grow in the long term. That could explain the weak share price.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. If you are thinking of buying or selling Shanghai Ganglian E-Commerce Holdings stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

While the broader market lost about 19% in the twelve months, Shanghai Ganglian E-Commerce Holdings shareholders did even worse, losing 44% (even including dividends). 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Before deciding if you like the current share price, check how Shanghai Ganglian E-Commerce Holdings scores on these 3 valuation metrics.

We will like Shanghai Ganglian E-Commerce Holdings better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.