Investors three-year losses continue as Fujian Torch Electron Technology (SHSE:603678) dips a further 5.7% this week, earnings continue to decline

The truth is that if you invest for long enough, you're going to end up with some losing stocks. Long term Fujian Torch Electron Technology Co., Ltd. (SHSE:603678) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 58% in that time. More recently, the share price has dropped a further 16% in a month.

With the stock having lost 5.7% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Fujian Torch Electron Technology

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

During the three years that the share price fell, Fujian Torch Electron Technology's earnings per share (EPS) dropped by 36% each year. This fall in the EPS is worse than the 25% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. With a P/E ratio of 48.96, it's fair to say the market sees a brighter future for the business.

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

This free interactive report on Fujian Torch Electron Technology's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Fujian Torch Electron Technology shareholders have received a total shareholder return of 30% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 6%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Fujian Torch Electron Technology better, we need to consider many other factors. For instance, we've identified 1 warning sign for Fujian Torch Electron Technology that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.