The past three years for Walvax Biotechnology (SZSE:300142) investors has not been profitable

As an investor, mistakes are inevitable. But really bad investments should be rare. So consider, for a moment, the misfortune of Walvax Biotechnology Co., Ltd. (SZSE:300142) investors who have held the stock for three years as it declined a whopping 85%. That'd be enough to cause even the strongest minds some disquiet. And over the last year the share price fell 58%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 19% in the last three months. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

Check out our latest analysis for Walvax Biotechnology

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years that the share price fell, Walvax Biotechnology's earnings per share (EPS) dropped by 38% each year. This fall in EPS isn't far from the rate of share price decline, which was 47% per year. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. It seems like the share price is reflecting the declining earnings per share.

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 Walvax Biotechnology's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 17% in the twelve months, Walvax Biotechnology shareholders did even worse, losing 57% (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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. 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. It's always interesting to track share price performance over the longer term. But to understand Walvax Biotechnology better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Walvax Biotechnology .

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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