HeNan Splendor Science & Technology (SZSE:002296) sheds CN¥421m, company earnings and investor returns have been trending downwards for past year

Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. For example, the HeNan Splendor Science & Technology Co., Ltd. (SZSE:002296) share price is down 23% in the last year. That's well below the market decline of 17%. At least the damage isn't so bad if you look at the last three years, since the stock is down 4.6% in that time. Furthermore, it's down 18% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for HeNan Splendor Science & Technology isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for HeNan Splendor Science & Technology

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 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.

Unfortunately HeNan Splendor Science & Technology reported an EPS drop of 8.0% for the last year. This reduction in EPS is not as bad as the 23% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It might be well worthwhile taking a look at our free report on HeNan Splendor Science & Technology's earnings, revenue and cash flow.

A Different Perspective

We regret to report that HeNan Splendor Science & Technology shareholders are down 23% for the year. Unfortunately, that's worse than the broader market decline of 17%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.2% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 2 warning signs for HeNan Splendor Science & Technology that you should be aware of before investing here.

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.

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.