Changzheng Engineering TechnologyLtd (SHSE:603698) earnings and shareholder returns have been trending downwards for the last three years, but the stock rises 5.8% this past week

For many investors, the main point of stock picking is to generate higher returns than the overall market. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Changzheng Engineering Technology Co.,Ltd (SHSE:603698) shareholders, since the share price is down 30% in the last three years, falling well short of the market decline of around 21%. But it's up 5.8% in the last week.

While the last three years has been tough for Changzheng Engineering TechnologyLtd shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

View our latest analysis for Changzheng Engineering TechnologyLtd

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Changzheng Engineering TechnologyLtd saw its EPS decline at a compound rate of 9.8% per year, over the last three years. This change in EPS is reasonably close to the 11% average annual decrease in the share price. So it seems like sentiment towards the stock hasn't changed all that much over time. It seems like the share price is reflecting the declining earnings per share.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It might be well worthwhile taking a look at our free report on Changzheng Engineering TechnologyLtd's earnings, revenue and cash flow.

A Different Perspective

While it's certainly disappointing to see that Changzheng Engineering TechnologyLtd shares lost 8.9% throughout the year, that wasn't as bad as the market loss of 11%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 3% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. It's always interesting to track share price performance over the longer term. But to understand Changzheng Engineering TechnologyLtd better, we need to consider many other factors. For example, we've discovered 2 warning signs for Changzheng Engineering TechnologyLtd that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.