The three-year shareholder returns and company earnings persist lower as Xinjiang Talimu Agriculture Development (SHSE:600359) stock falls a further 12% in past week

Many investors define successful investing as beating the market average over the long term. 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 Xinjiang Talimu Agriculture Development Co., Ltd. (SHSE:600359) shareholders, since the share price is down 23% in the last three years, falling well short of the market decline of around 13%. And the share price decline continued over the last week, dropping some 12%.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

See our latest analysis for Xinjiang Talimu Agriculture Development

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the three years that the share price fell, Xinjiang Talimu Agriculture Development's earnings per share (EPS) dropped by 17% each year. In comparison the 8% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 50.64.

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

Dive deeper into Xinjiang Talimu Agriculture Development's key metrics by checking this interactive graph of Xinjiang Talimu Agriculture Development's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 14% in the last year, Xinjiang Talimu Agriculture Development shareholders lost 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Take risks, for example - Xinjiang Talimu Agriculture Development has 1 warning sign we think 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.