Shenzhen Cereals HoldingsLtd's (SZSE:000019) earnings have declined over year, contributing to shareholders 15% loss

You can invest in an index fund if you want to make sure your returns approximately match the overall market. By comparison, an individual stock is unlikely to match market returns - and could well fall short. One such example is Shenzhen Cereals Holdings Co.,Ltd. (SZSE:000019), which saw its share price fall 18% over a year, against a market decline of 14%. However, the longer term returns haven't been so bad, with the stock down 12% in the last three years. On the other hand the share price has bounced 6.6% over the last week. The buoyant market could have helped drive the share price pop, since stocks are up 5.4% in the same period.

The recent uptick of 6.6% could be a positive sign of things to come, so let's take a look at historical fundamentals.

View our latest analysis for Shenzhen Cereals HoldingsLtd

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Unhappily, Shenzhen Cereals HoldingsLtd had to report a 12% decline in EPS over the last year. This reduction in EPS is not as bad as the 18% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Shenzhen Cereals HoldingsLtd's key metrics by checking this interactive graph of Shenzhen Cereals HoldingsLtd's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Shenzhen Cereals HoldingsLtd's TSR for the last 1 year was -15%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Shenzhen Cereals HoldingsLtd shareholders are down 15% over twelve months (even including dividends), which isn't far from the market return of -14%. The silver lining is that longer term investors would have made a total return of 3% per year over half a decade. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. 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. For instance, we've identified 1 warning sign for Shenzhen Cereals HoldingsLtd that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.