Investors three-year losses continue as Shanghai Fosun Pharmaceutical (Group) (SHSE:600196) dips a further 3.1% this week, earnings continue to decline

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (SHSE:600196) shareholders should be happy to see the share price up 16% in the last quarter. But that is small recompense for the exasperating returns over three years. Indeed, the share price is down a tragic 54% in the last three years. So it's good to see it climbing back up. After all, could be that the fall was overdone.

If the past week is anything to go by, investor sentiment for Shanghai Fosun Pharmaceutical (Group) isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Shanghai Fosun Pharmaceutical (Group)

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 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).

During the three years that the share price fell, Shanghai Fosun Pharmaceutical (Group)'s earnings per share (EPS) dropped by 25% each year. This fall in EPS isn't far from the rate of share price decline, which was 23% per year. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. Rather, the share price has approximately tracked EPS growth.

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

Dive deeper into Shanghai Fosun Pharmaceutical (Group)'s key metrics by checking this interactive graph of Shanghai Fosun Pharmaceutical (Group)'s earnings, revenue and cash flow.

A Different Perspective

Investors in Shanghai Fosun Pharmaceutical (Group) had a tough year, with a total loss of 6.7% (including dividends), against a market gain of about 5.3%. 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. Longer term investors wouldn't be so upset, since they would have made 1.8%, 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. 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 3 warning signs for Shanghai Fosun Pharmaceutical (Group) you should be aware of.

But note: Shanghai Fosun Pharmaceutical (Group) may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.