The three-year decline in earnings might be taking its toll on Yunding TechnologyLtd (SZSE:000409) shareholders as stock falls 6.5% over the past week

Yunding Technology Co.,Ltd. (SZSE:000409) shareholders have seen the share price descend 12% over the month. But that doesn't change the fact that the returns over the last three years have been pleasing. In the last three years the share price is up, 40%: better than the market.

While this past week has detracted from the company's three-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

See our latest analysis for Yunding TechnologyLtd

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years of share price growth, Yunding TechnologyLtd actually saw its earnings per share (EPS) drop 10% per year.

So we doubt that the market is looking to EPS for its main judge of the company's value. Given this situation, it makes sense to look at other metrics too.

It could be that the revenue growth of 19% per year is viewed as evidence that Yunding TechnologyLtd is growing. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Yunding TechnologyLtd's financial health with this free report on its balance sheet.

A Different Perspective

Yunding TechnologyLtd shareholders are down 11% over twelve months, which isn't far from the market return of -10%. The silver lining is that longer term investors would have made a total return of 5% per year over half a decade. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. Before deciding if you like the current share price, check how Yunding TechnologyLtd scores on these 3 valuation metrics.

We will like Yunding TechnologyLtd better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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

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.