Despite delivering investors losses of 26% over the past 3 years, Zhuzhou Smelter GroupLtd (SHSE:600961) has been growing its earnings

One of the frustrations of investing is when a stock goes down. But it's hard to avoid some disappointing investments when the overall market is down. Over three years the Zhuzhou Smelter Group Co.,Ltd. (SHSE:600961) share price fell 26%. The silver lining to that cloud is that this return is superior to the average market decline of 32%. Furthermore, it's down 23% in about a quarter. That's not much fun for holders.

While the stock has risen 8.5% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

View our latest analysis for Zhuzhou Smelter GroupLtd

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 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 unfortunate three years of share price decline, Zhuzhou Smelter GroupLtd actually saw its earnings per share (EPS) improve by 17% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.

We note that, in three years, revenue has actually grown at a 5.4% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating Zhuzhou Smelter GroupLtd further; while we may be missing something on this analysis, there might also be an opportunity.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on Zhuzhou Smelter GroupLtd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While it's certainly disappointing to see that Zhuzhou Smelter GroupLtd shares lost 6.7% throughout the year, that wasn't as bad as the market loss of 19%. Unfortunately, last year's performance may indicate unresolved challenges, given that it's worse than the annualised loss of 3% over the last half decade. While some investors do well specializing in buying companies that are struggling (but nonetheless undervalued), don't forget that Buffett said that 'turnarounds seldom turn'. Before deciding if you like the current share price, check how Zhuzhou Smelter GroupLtd scores on these 3 valuation metrics.

Of course Zhuzhou Smelter GroupLtd 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.