Investors three-year losses continue as Hailir Pesticides and Chemicals GroupLtd (SHSE:603639) dips a further 8.2% this week, earnings continue to decline

No-one enjoys it when they lose money on a stock. But it's hard to avoid some disappointing investments when the overall market is down. The Hailir Pesticides and Chemicals Group Co.,Ltd. (SHSE:603639) is down 29% over three years, but the total shareholder return is -21% once you include the dividend. That's better than the market which declined 23% over the last three years. The more recent news is of little comfort, with the share price down 22% in a year. Unfortunately the share price momentum is still quite negative, with prices down 17% in thirty days.

With the stock having lost 8.2% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Hailir Pesticides and Chemicals GroupLtd

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 three years that the share price fell, Hailir Pesticides and Chemicals GroupLtd's earnings per share (EPS) dropped by 3.8% each year. This reduction in EPS is slower than the 11% annual reduction in the share price. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 10.78.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It might be well worthwhile taking a look at our free report on Hailir Pesticides and Chemicals GroupLtd's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Hailir Pesticides and Chemicals GroupLtd the TSR over the last 3 years was -21%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

We regret to report that Hailir Pesticides and Chemicals GroupLtd shareholders are down 22% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 13%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 2%, 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Hailir Pesticides and Chemicals GroupLtd , and understanding them should be part of your investment process.

But note: Hailir Pesticides and Chemicals GroupLtd 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.