The three-year underlying earnings growth at Walvax Biotechnology (SZSE:300142) is promising, but the shareholders are still in the red over that time

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Walvax Biotechnology Co., Ltd. (SZSE:300142) have had an unfortunate run in the last three years. Unfortunately, they have held through a 66% decline in the share price in that time. And over the last year the share price fell 55%, so we doubt many shareholders are delighted. Shareholders have had an even rougher run lately, with the share price down 32% in the last 90 days.

After losing 13% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Walvax Biotechnology

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During the unfortunate three years of share price decline, Walvax Biotechnology actually saw its earnings per share (EPS) improve by 16% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Alternatively, growth expectations may have been unreasonable in the past.

It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.

The modest 0.06% dividend yield is unlikely to be guiding the market view of the stock. Revenue is actually up 23% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching Walvax Biotechnology more closely, as sometimes stocks fall unfairly. This could present an opportunity.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We know that Walvax Biotechnology has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Walvax Biotechnology stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

We regret to report that Walvax Biotechnology shareholders are down 55% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 15%. 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 8% 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. Before deciding if you like the current share price, check how Walvax Biotechnology scores on these 3 valuation metrics.

Of course Walvax Biotechnology may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.