The one-year shareholder returns and company earnings persist lower as China Animal Husbandry Industry (SHSE:600195) stock falls a further 6.8% in past week

It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by China Animal Husbandry Industry Co., Ltd. (SHSE:600195) shareholders over the last year, as the share price declined 48%. That's disappointing when you consider the market declined 19%. To make matters worse, the returns over three years have also been really disappointing (the share price is 35% lower than three years ago). The falls have accelerated recently, with the share price down 26% in the last three months.

With the stock having lost 6.8% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for China Animal Husbandry Industry

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 China Animal Husbandry Industry reported an EPS drop of 39% for the last year. We note that the 48% share price drop is very close to the EPS drop. Given the lower EPS we might have expected investors to lose confidence in the stock, but that doesn't seemed to have happened. Rather, the share price has approximately tracked EPS growth.

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

Dive deeper into China Animal Husbandry Industry's key metrics by checking this interactive graph of China Animal Husbandry Industry's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 19% in the twelve months, China Animal Husbandry Industry shareholders did even worse, losing 47% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. 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. 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. Case in point: We've spotted 2 warning signs for China Animal Husbandry Industry you should be aware of.

Of course China Animal Husbandry Industry may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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