C&S PaperLtd (SZSE:002511) sheds CN¥456m, company earnings and investor returns have been trending downwards for past three years

While not a mind-blowing move, it is good to see that the C&S Paper Co.,Ltd (SZSE:002511) share price has gained 17% in the last three months. Meanwhile over the last three years the stock has dropped hard. In that time, the share price dropped 57%. So the improvement may be a real relief to some. Perhaps the company has turned over a new leaf.

After losing 4.7% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for C&S PaperLtd

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

C&S PaperLtd saw its EPS decline at a compound rate of 32% per year, over the last three years. In comparison the 24% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into C&S PaperLtd's key metrics by checking this interactive graph of C&S PaperLtd's earnings, revenue and cash flow.

A Different Perspective

Investors in C&S PaperLtd had a tough year, with a total loss of 28% (including dividends), against a market gain of about 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand C&S PaperLtd better, we need to consider many other factors. For example, we've discovered 1 warning sign for C&S PaperLtd that you should be aware of before investing here.

Of course C&S PaperLtd 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.