The three-year shareholder returns and company earnings persist lower as Gansu Shangfeng CementLtd (SZSE:000672) stock falls a further 5.3% in past week

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the last three years have been particularly tough on longer term Gansu Shangfeng Cement Co.,Ltd (SZSE:000672) shareholders. So they might be feeling emotional about the 61% share price collapse, in that time. Unfortunately the share price momentum is still quite negative, with prices down 8.8% in thirty days. But this could be related to poor market conditions -- stocks are down 7.7% in the same time.

After losing 5.3% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Gansu Shangfeng CementLtd

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. 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.

Gansu Shangfeng CementLtd saw its EPS decline at a compound rate of 40% per year, over the last three years. This fall in the EPS is worse than the 27% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Gansu Shangfeng CementLtd's key metrics by checking this interactive graph of Gansu Shangfeng CementLtd's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Gansu Shangfeng CementLtd, it has a TSR of -55% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

While the broader market gained around 6.1% in the last year, Gansu Shangfeng CementLtd shareholders lost 1.1% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, longer term shareholders are suffering worse, given the loss of 7% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. 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. Take risks, for example - Gansu Shangfeng CementLtd has 1 warning sign we think you should be aware of.

We will like Gansu Shangfeng CementLtd 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.

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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.