The three-year shareholder returns and company earnings persist lower as Shenzhen FRD Science & Technology (SZSE:300602) stock falls a further 7.0% in past week

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But if you try your hand at stock picking, you risk returning less than the market. Unfortunately, that's been the case for longer term Shenzhen FRD Science & Technology Co., Ltd. (SZSE:300602) shareholders, since the share price is down 34% in the last three years, falling well short of the market decline of around 25%. The last week also saw the share price slip down another 7.0%.

Since Shenzhen FRD Science & Technology has shed CN¥609m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Shenzhen FRD Science & Technology

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. 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.

During the three years that the share price fell, Shenzhen FRD Science & Technology's earnings per share (EPS) dropped by 13% each year. The 13% average annual share price decline is remarkably close to the EPS decline. So it seems like sentiment towards the stock hasn't changed all that much over time. Rather, the share price has approximately tracked EPS growth.

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

We know that Shenzhen FRD Science & Technology has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Shenzhen FRD Science & Technology will grow revenue in the future.

A Different Perspective

Shenzhen FRD Science & Technology shareholders are down 16% over twelve months (even including dividends), which isn't far from the market return of -15%. So last year was actually even worse than the last five years, which cost shareholders 5% per year. Weak performance over the long term usually destroys market confidence in a stock, but bargain hunters may want to take a closer look for signs of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Shenzhen FRD Science & Technology better, we need to consider many other factors. Even so, be aware that Shenzhen FRD Science & Technology is showing 1 warning sign in our investment analysis , you should know about...

We will like Shenzhen FRD Science & Technology 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.

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