Ningbo Menovo Pharmaceutical (SHSE:603538 shareholders incur further losses as stock declines 11% this week, taking three-year losses to 66%

Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of Ningbo Menovo Pharmaceutical Co., Ltd. (SHSE:603538) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 67% drop in the share price over that period. The more recent news is of little comfort, with the share price down 40% in a year. More recently, the share price has dropped a further 24% in a month.

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

Check out our latest analysis for Ningbo Menovo Pharmaceutical

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.

Over the three years that the share price declined, Ningbo Menovo Pharmaceutical's earnings per share (EPS) dropped significantly, falling to a loss. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. But it's safe to say we'd generally expect the share price to be lower as a result!

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

This free interactive report on Ningbo Menovo Pharmaceutical's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that Ningbo Menovo Pharmaceutical shareholders are down 40% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 12%. 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. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. You could get a better understanding of Ningbo Menovo Pharmaceutical's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.