The one-year underlying earnings growth at Shenzhen SEGLtd (SZSE:000058) is promising, but the shareholders are still in the red over that time

Most people feel a little frustrated if a stock they own goes down in price. But in the short term the market is a voting machine, and the share price movements may not reflect the underlying business performance. So while the Shenzhen SEG Co.,Ltd (SZSE:000058) share price is down 13% in the last year, the total return to shareholders (which includes dividends) was -12%. That's better than the market which declined 14% over the last year. At least the damage isn't so bad if you look at the last three years, since the stock is down 7.9% in that time. The share price has dropped 19% in three months.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

View our latest analysis for Shenzhen SEGLtd

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Shenzhen SEGLtd stole the show with its EPS rocketing, in the last year. While the business is unlikely to sustain such a high growth rate for long, it's great to see. As you can imagine, the share price action therefore perturbs us. Some different data might shed some more light on the situation.

With a low yield of 0.6% we doubt that the dividend influences the share price much. Shenzhen SEGLtd managed to grow revenue over the last year, which is usually a real positive. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Take a more thorough look at Shenzhen SEGLtd's financial health with this free report on its balance sheet.

A Different Perspective

While it's certainly disappointing to see that Shenzhen SEGLtd shares lost 12% throughout the year, that wasn't as bad as the market loss of 14%. Given the total loss of 1.0% 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 Shenzhen SEGLtd better, we need to consider many other factors. Even so, be aware that Shenzhen SEGLtd is showing 1 warning sign in our investment analysis , you should know about...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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