Further weakness as Hangzhou Silan MicroelectronicsLtd (SHSE:600460) drops 4.6% this week, taking three-year losses to 52%

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Hangzhou Silan Microelectronics Co.,Ltd (SHSE:600460) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 53% in that time. The more recent news is of little comfort, with the share price down 45% in a year.

If the past week is anything to go by, investor sentiment for Hangzhou Silan MicroelectronicsLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Hangzhou Silan MicroelectronicsLtd

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 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.

Over the three years that the share price declined, Hangzhou Silan MicroelectronicsLtd's earnings per share (EPS) dropped significantly, falling to a loss. Extraordinary items contributed to this situation. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

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

A Different Perspective

While the broader market lost about 8.7% in the twelve months, Hangzhou Silan MicroelectronicsLtd shareholders did even worse, losing 45%. 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. Longer term investors wouldn't be so upset, since they would have made 1.0%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. For example, we've discovered 1 warning sign for Hangzhou Silan MicroelectronicsLtd that you should be aware of before investing here.

Of course Hangzhou Silan MicroelectronicsLtd 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.