Jiangsu Hengshun Vinegar-IndustryLtd (SHSE:600305) stock falls 5.2% in past week as three-year earnings and shareholder returns continue downward trend

If you love investing in stocks you're bound to buy some losers. But the long term shareholders of Jiangsu Hengshun Vinegar-Industry Co.,Ltd (SHSE:600305) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 63% drop in the share price over that period. And more recent buyers are having a tough time too, with a drop of 32% in the last year.

If the past week is anything to go by, investor sentiment for Jiangsu Hengshun Vinegar-IndustryLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Jiangsu Hengshun Vinegar-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 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).

During the three years that the share price fell, Jiangsu Hengshun Vinegar-IndustryLtd's earnings per share (EPS) dropped by 42% each year. In comparison the 28% compound annual share price decline isn't as bad as the EPS drop-off. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in. With a P/E ratio of 116.91, it's fair to say the market sees a brighter future for the business.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It might be well worthwhile taking a look at our free report on Jiangsu Hengshun Vinegar-IndustryLtd's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Jiangsu Hengshun Vinegar-IndustryLtd shareholders are down 32% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 14%. 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 8% 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 Jiangsu Hengshun Vinegar-IndustryLtd better, we need to consider many other factors. For instance, we've identified 2 warning signs for Jiangsu Hengshun Vinegar-IndustryLtd (1 is potentially serious) that you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com