Jiangsu Tongguang Electronic Wire & Cable (SZSE:300265) stock falls 16% in past week as one-year earnings and shareholder returns continue downward trend

Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Jiangsu Tongguang Electronic Wire & Cable Co., Ltd. (SZSE:300265) shareholders over the last year, as the share price declined 37%. That falls noticeably short of the market decline of around 14%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 29% in three years. And the share price decline continued over the last week, dropping some 16%.

Since Jiangsu Tongguang Electronic Wire & Cable has shed CN¥555m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Jiangsu Tongguang Electronic Wire & Cable

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 Jiangsu Tongguang Electronic Wire & Cable reported an EPS drop of 26% for the last year. This reduction in EPS is not as bad as the 37% share price fall. This suggests the EPS fall has made some shareholders more nervous about the business.

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

It might be well worthwhile taking a look at our free report on Jiangsu Tongguang Electronic Wire & Cable's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Jiangsu Tongguang Electronic Wire & Cable shareholders are down 37% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 14%. 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 5% 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. 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. Case in point: We've spotted 3 warning signs for Jiangsu Tongguang Electronic Wire & Cable you should be aware of, and 1 of them can't be ignored.

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