Guangdong Ganhua Science & IndustryLtd (SZSE:000576) adds CN¥254m to market cap in the past 7 days, though investors from three years ago are still down 42%

It's nice to see the Guangdong Ganhua Science & Industry Co.,Ltd. (SZSE:000576) share price up 11% in a week. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 42% in the last three years, significantly under-performing the market.

The recent uptick of 11% could be a positive sign of things to come, so let's take a look at historical fundamentals.

View our latest analysis for Guangdong Ganhua Science & IndustryLtd

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 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.

Over the three years that the share price declined, Guangdong Ganhua Science & IndustryLtd's earnings per share (EPS) dropped significantly, falling to a loss. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.

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

Dive deeper into Guangdong Ganhua Science & IndustryLtd's key metrics by checking this interactive graph of Guangdong Ganhua Science & IndustryLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 18% in the twelve months, Guangdong Ganhua Science & IndustryLtd shareholders did even worse, losing 42%. 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. It's always interesting to track share price performance over the longer term. But to understand Guangdong Ganhua Science & IndustryLtd better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Guangdong Ganhua Science & IndustryLtd you should be aware of.

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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