The three-year loss for Bafang Electric (Suzhou)Ltd (SHSE:603489) shareholders likely driven by its shrinking earnings

While not a mind-blowing move, it is good to see that the Bafang Electric (Suzhou) Co.,Ltd. (SHSE:603489) share price has gained 15% in the last three months. But only the myopic could ignore the astounding decline over three years. To wit, the share price sky-dived 75% in that time. So it's about time shareholders saw some gains. Only time will tell if the company can sustain the turnaround.

While the stock has risen 9.6% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Check out our latest analysis for Bafang Electric (Suzhou)Ltd

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the three years that the share price fell, Bafang Electric (Suzhou)Ltd's earnings per share (EPS) dropped by 52% each year. This fall in the EPS is worse than the 37% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in. With a P/E ratio of 102.19, it's fair to say the market sees a brighter future for the business.

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

This free interactive report on Bafang Electric (Suzhou)Ltd's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 20% in the last year, Bafang Electric (Suzhou)Ltd shareholders lost 3.2% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. However, the loss over the last year isn't as bad as the 8% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. 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. For example, we've discovered 3 warning signs for Bafang Electric (Suzhou)Ltd (1 shouldn't be ignored!) that you should be aware of before investing here.

But note: Bafang Electric (Suzhou)Ltd 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.

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

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.