Market is not liking Guizhou Panjiang Refined CoalLtd's (SHSE:600395) earnings decline as stock retreats 5.9% this week

Investors are understandably disappointed when a stock they own declines in value. But when the market is down, you're bound to have some losers. While the Guizhou Panjiang Refined Coal Co.,Ltd. (SHSE:600395) share price is down 23% in the last three years, the total return to shareholders (which includes dividends) was -9.3%. That's better than the market which declined 28% over the last three years. Shareholders have had an even rougher run lately, with the share price down 16% in the last 90 days. Of course, this share price action may well have been influenced by the 7.3% decline in the broader market, throughout the 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.

View our latest analysis for Guizhou Panjiang Refined CoalLtd

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. 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, Guizhou Panjiang Refined CoalLtd's earnings per share (EPS) dropped by 31% each year. This fall in the EPS is worse than the 8% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Guizhou Panjiang Refined CoalLtd, it has a TSR of -9.3% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

The total return of 17% received by Guizhou Panjiang Refined CoalLtd shareholders over the last year isn't far from the market return of -17%. Longer term investors wouldn't be so upset, since they would have made 5%, each year, over five years. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. It's always interesting to track share price performance over the longer term. But to understand Guizhou Panjiang Refined CoalLtd better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with Guizhou Panjiang Refined CoalLtd (including 3 which make us uncomfortable) .

We will like Guizhou Panjiang Refined CoalLtd 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