Jiangsu Dingsheng New Materials Ltd's (SHSE:603876 one-year decrease in earnings delivers investors with a 53% loss

Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Jiangsu Dingsheng New Materials Joint-Stock Co.,Ltd (SHSE:603876) have suffered share price declines over the last year. To wit the share price is down 53% in that time. Even if you look out three years, the returns are still disappointing, with the share price down44% in that time. The falls have accelerated recently, with the share price down 16% in the last three months. But this could be related to the weak market, which is down 7.2% in the same period.

Since Jiangsu Dingsheng New Materials Ltd has shed CN¥380m 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 Jiangsu Dingsheng New Materials Ltd

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).

Unfortunately Jiangsu Dingsheng New Materials Ltd reported an EPS drop of 70% for the last year. This fall in the EPS is significantly worse than the 53% the share price fall. It may have been that the weak EPS was not as bad as some had feared.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Jiangsu Dingsheng New Materials Ltd has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Jiangsu Dingsheng New Materials Ltd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 17% in the twelve months, Jiangsu Dingsheng New Materials Ltd shareholders did even worse, losing 53% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Take risks, for example - Jiangsu Dingsheng New Materials Ltd has 2 warning signs we think you should be aware of.

Of course Jiangsu Dingsheng New Materials Ltd 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com