Nanjing King-Friend Biochemical PharmaceuticalLtd (SHSE:603707) shareholders have endured a 53% loss from investing in the stock three years ago

Investing in stocks inevitably means buying into some companies that perform poorly. But long term Nanjing King-Friend Biochemical Pharmaceutical Co.,Ltd. (SHSE:603707) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 54% decline in the share price in that time. Furthermore, it's down 13% in about a quarter. That's not much fun for holders. However, one could argue that the price has been influenced by the general market, which is down 11% in the same timeframe.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

See our latest analysis for Nanjing King-Friend Biochemical PharmaceuticalLtd

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Nanjing King-Friend Biochemical PharmaceuticalLtd saw its share price decline over the three years in which its EPS also dropped, 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!

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

It might be well worthwhile taking a look at our free report on Nanjing King-Friend Biochemical PharmaceuticalLtd's earnings, revenue and cash flow.

A Different Perspective

While it's certainly disappointing to see that Nanjing King-Friend Biochemical PharmaceuticalLtd shares lost 12% throughout the year, that wasn't as bad as the market loss of 20%. Given the total loss of 0.8% per year over five years, it seems returns have deteriorated in the last twelve months. Whilst Baron Rothschild does tell the investor "buy when there's blood in the streets, even if the blood is your own", buyers would need to examine the data carefully to be comfortable that the business itself is sound. It's always interesting to track share price performance over the longer term. But to understand Nanjing King-Friend Biochemical PharmaceuticalLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Nanjing King-Friend Biochemical PharmaceuticalLtd , and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com