Wangneng EnvironmentLtd (SZSE:002034) stock falls 5.9% in past week as three-year earnings and shareholder returns continue downward trend

No-one enjoys it when they lose money on a stock. But when the market is down, you're bound to have some losers. The Wangneng Environment Co.,Ltd (SZSE:002034) is down 24% over three years, but the total shareholder return is -17% once you include the dividend. That's better than the market which declined 17% over the last three years. The last week also saw the share price slip down another 5.9%. But this could be related to the soft market, which is down about 4.8% in the same period.

After losing 5.9% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Wangneng EnvironmentLtd

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the three years that the share price fell, Wangneng EnvironmentLtd's earnings per share (EPS) dropped by 1.7% each year. The share price decline of 9% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 10.58.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Wangneng EnvironmentLtd the TSR over the last 3 years was -17%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Investors in Wangneng EnvironmentLtd had a tough year, with a total loss of 2.1% (including dividends), against a market gain of about 7.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 1.5% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Wangneng EnvironmentLtd better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Wangneng EnvironmentLtd .

But note: Wangneng EnvironmentLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.