Investors three-year losses continue as DaShenLin Pharmaceutical Group (SHSE:603233) dips a further 4.1% this week, earnings continue to decline

As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term DaShenLin Pharmaceutical Group Co., Ltd. (SHSE:603233) shareholders, since the share price is down 54% in the last three years, falling well short of the market decline of around 17%. The more recent news is of little comfort, with the share price down 44% in a year. Unfortunately the share price momentum is still quite negative, with prices down 12% in thirty days. We do note, however, that the broader market is down 8.6% in that period, and this may have weighed on the share price.

If the past week is anything to go by, investor sentiment for DaShenLin Pharmaceutical Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for DaShenLin Pharmaceutical Group

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, DaShenLin Pharmaceutical Group's earnings per share (EPS) dropped by 5.7% each year. The share price decline of 23% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into DaShenLin Pharmaceutical Group's key metrics by checking this interactive graph of DaShenLin Pharmaceutical Group's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of DaShenLin Pharmaceutical Group, it has a TSR of -50% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

DaShenLin Pharmaceutical Group shareholders are down 42% for the year (even including dividends), but the market itself is up 7.9%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% 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. It's always interesting to track share price performance over the longer term. But to understand DaShenLin Pharmaceutical Group better, we need to consider many other factors. Even so, be aware that DaShenLin Pharmaceutical Group is showing 2 warning signs in our investment analysis , you should know about...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.