Shenzhen Cotran New MaterialLtd (SZSE:300731) stock falls 18% in past week as five-year earnings and shareholder returns continue downward trend

The main aim of stock picking is to find the market-beating stocks. But even the best stock picker will only win with some selections. At this point some shareholders may be questioning their investment in Shenzhen Cotran New Material Co.,Ltd. (SZSE:300731), since the last five years saw the share price fall 42%. The last week also saw the share price slip down another 18%.

After losing 18% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Shenzhen Cotran New MaterialLtd

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 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.

Looking back five years, both Shenzhen Cotran New MaterialLtd's share price and EPS declined; the latter at a rate of 15% per year. This fall in the EPS is worse than the 10% compound annual share price fall. The relatively muted share price reaction might be because the market expects the business to turn around. With a P/E ratio of 109.39, it's fair to say the market sees a brighter future for the business.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We know that Shenzhen Cotran New MaterialLtd has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

A Different Perspective

Shenzhen Cotran New MaterialLtd's TSR for the year was broadly in line with the market average, at 17%. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 7%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for Shenzhen Cotran New MaterialLtd. 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. Case in point: We've spotted 1 warning sign for Shenzhen Cotran New MaterialLtd you should be aware of.

We will like Shenzhen Cotran New MaterialLtd 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.