Nanjing Chixia DevelopmentLtd (SHSE:600533 shareholders incur further losses as stock declines 12% this week, taking one-year losses to 49%

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Nanjing Chixia Development Co.,Ltd. (SHSE:600533) share price slid 49% over twelve months. That's well below the market decline of 17%. To make matters worse, the returns over three years have also been really disappointing (the share price is 45% lower than three years ago). The falls have accelerated recently, with the share price down 30% in the last three months. But this could be related to the weak market, which is down 13% in the same period.

Since Nanjing Chixia DevelopmentLtd has shed CN¥252m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Nanjing Chixia DevelopmentLtd

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 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.

Nanjing Chixia DevelopmentLtd fell to a loss making position during the year. While this may prove temporary, we'd consider it a negative, so it doesn't surprise us that the stock price is down. However, there may be an opportunity for investors if the company can recover.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It might be well worthwhile taking a look at our free report on Nanjing Chixia DevelopmentLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 17% in the twelve months, Nanjing Chixia DevelopmentLtd shareholders did even worse, losing 49% (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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% 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. It's always interesting to track share price performance over the longer term. But to understand Nanjing Chixia DevelopmentLtd better, we need to consider many other factors. Take risks, for example - Nanjing Chixia DevelopmentLtd has 3 warning signs we think you should be aware of.

We will like Nanjing Chixia DevelopmentLtd 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.