The past three years for Wuchan Zhongda GroupLtd (SHSE:600704) investors has not been profitable

Investors are understandably disappointed when a stock they own declines in value. But no-one can make money on every call, especially in a declining market. While the Wuchan Zhongda Group Co.,Ltd. (SHSE:600704) share price is down 14% in the last three years, the total return to shareholders (which includes dividends) was -3.6%. That's better than the market which declined 11% over the last three years.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

See our latest analysis for Wuchan Zhongda GroupLtd

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...' 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.

Wuchan Zhongda GroupLtd saw its EPS decline at a compound rate of 2.0% per year, over the last three years. The share price decline of 5% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 7.85.

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

Dive deeper into Wuchan Zhongda GroupLtd's key metrics by checking this interactive graph of Wuchan Zhongda GroupLtd's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Wuchan Zhongda GroupLtd's TSR for the last 3 years was -3.6%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Wuchan Zhongda GroupLtd shareholders gained a total return of 11% during the year. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 1.3% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Wuchan Zhongda GroupLtd has 1 warning sign we think you should be aware of.

But note: Wuchan Zhongda GroupLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.