Shareholders in Zhejiang Hisun Pharmaceutical (SHSE:600267) have lost 33%, as stock drops 3.7% this past week

While not a mind-blowing move, it is good to see that the Zhejiang Hisun Pharmaceutical Co., Ltd. (SHSE:600267) share price has gained 20% in the last three months. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 35% in the last three years, falling well short of the market return.

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

See our latest analysis for Zhejiang Hisun Pharmaceutical

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over the three years that the share price declined, Zhejiang Hisun Pharmaceutical's earnings per share (EPS) dropped significantly, falling to a loss. This was, in part, due to extraordinary items impacting earnings. Due to the loss, it's not easy to use EPS as a reliable guide to the business. However, we can say we'd expect to see a falling share price in this scenario.

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 gained around 14% in the last year, Zhejiang Hisun Pharmaceutical shareholders lost 8.5%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2% 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. You could get a better understanding of Zhejiang Hisun Pharmaceutical's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

We will like Zhejiang Hisun Pharmaceutical 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.