Rianlon (SZSE:300596) stock falls 6.7% in past week as one-year earnings and shareholder returns continue downward trend

Investors can approximate the average market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, the Rianlon Corporation (SZSE:300596) share price is down 39% in the last year. That's disappointing when you consider the market declined 15%. Even if you look out three years, the returns are still disappointing, with the share price down36% in that time. Unfortunately the share price momentum is still quite negative, with prices down 15% in thirty days.

Since Rianlon has shed CN¥395m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Rianlon

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 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 Rianlon reported an EPS drop of 21% for the last year. This reduction in EPS is not as bad as the 39% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.

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

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

A Different Perspective

We regret to report that Rianlon shareholders are down 39% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 15%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Rianlon better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Rianlon .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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