Ningbo Tianlong Electronics (SHSE:603266) stock falls 12% in past week as one-year earnings and shareholder returns continue downward trend

Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Ningbo Tianlong Electronics Co., Ltd. (SHSE:603266) have tasted that bitter downside in the last year, as the share price dropped 40%. That contrasts poorly with the market return of 7.2%. The silver lining (for longer term investors) is that the stock is still 21% higher than it was three years ago. Unfortunately the share price momentum is still quite negative, with prices down 19% in thirty days.

Since Ningbo Tianlong Electronics has shed CN¥386m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Check out our latest analysis for Ningbo Tianlong Electronics

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Unfortunately Ningbo Tianlong Electronics reported an EPS drop of 5.3% for the last year. This reduction in EPS is not as bad as the 40% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

Investors in Ningbo Tianlong Electronics had a tough year, with a total loss of 39% (including dividends), against a market gain of about 7.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 5%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Ningbo Tianlong Electronics better, we need to consider many other factors. Even so, be aware that Ningbo Tianlong Electronics is showing 1 warning sign in our investment analysis , you should know about...

But note: Ningbo Tianlong Electronics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.