CNNC Hua Yuan Titanium Dioxide (SZSE:002145) stock falls 4.1% in past week as three-year earnings and shareholder returns continue downward trend

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of CNNC Hua Yuan Titanium Dioxide Co., Ltd (SZSE:002145) have had an unfortunate run in the last three years. So they might be feeling emotional about the 58% share price collapse, in that time. And more recent buyers are having a tough time too, with a drop of 38% in the last year. More recently, the share price has dropped a further 14% in a month.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

View our latest analysis for CNNC Hua Yuan Titanium Dioxide

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

CNNC Hua Yuan Titanium Dioxide saw its EPS decline at a compound rate of 19% per year, over the last three years. The share price decline of 25% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

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

A Different Perspective

While the broader market lost about 11% in the twelve months, CNNC Hua Yuan Titanium Dioxide shareholders did even worse, losing 36% (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. Longer term investors wouldn't be so upset, since they would have made 8%, 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. To that end, you should learn about the 2 warning signs we've spotted with CNNC Hua Yuan Titanium Dioxide (including 1 which can't be ignored) .

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.