The past one-year earnings decline for Sinomach AutomobileLtd (SHSE:600335) likely explains shareholders long-term losses

While not a mind-blowing move, it is good to see that the Sinomach Automobile Co.,Ltd. (SHSE:600335) share price has gained 23% in the last three months. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 31% in a year, falling short of the returns you could get by investing in an index fund.

While the last year has been tough for Sinomach AutomobileLtd shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

View our latest analysis for Sinomach AutomobileLtd

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Unhappily, Sinomach AutomobileLtd had to report a 75% decline in EPS over the last year. This fall in the EPS is significantly worse than the 31% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster. With a P/E ratio of 128.49, it's fair to say the market sees an EPS rebound on the cards.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

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

A Different Perspective

Investors in Sinomach AutomobileLtd had a tough year, with a total loss of 31% (including dividends), against a market gain of about 9.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with Sinomach AutomobileLtd (including 2 which shouldn't be ignored) .

Of course Sinomach AutomobileLtd 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.