Jiangsu Hengshun Vinegar-IndustryLtd (SHSE:600305) earnings and shareholder returns have been trending downwards for the last three years, but the stock lifts 6.9% this past week

If you love investing in stocks you're bound to buy some losers. Long term Jiangsu Hengshun Vinegar-Industry Co.,Ltd (SHSE:600305) shareholders know that all too well, since the share price is down considerably over three years. So they might be feeling emotional about the 52% share price collapse, in that time. And more recent buyers are having a tough time too, with a drop of 29% in the last year. But it's up 6.9% in the last week.

On a more encouraging note the company has added CN¥516m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

See our latest analysis for Jiangsu Hengshun Vinegar-IndustryLtd

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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, Jiangsu Hengshun Vinegar-IndustryLtd's earnings per share (EPS) dropped by 44% each year. This fall in the EPS is worse than the 22% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. With a P/E ratio of 140.21, it's fair to say the market sees a brighter future for the business.

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.

A Different Perspective

We regret to report that Jiangsu Hengshun Vinegar-IndustryLtd shareholders are down 29% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 19%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Jiangsu Hengshun Vinegar-IndustryLtd (including 1 which makes us a bit uncomfortable) .

Of course Jiangsu Hengshun Vinegar-IndustryLtd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.