Guangzhou Shiyuan Electronic Technology (SZSE:002841) stock falls 5.0% in past week as three-year earnings and shareholder returns continue downward trend

As an investor, mistakes are inevitable. But you want to avoid the really big losses like the plague. So take a moment to sympathize with the long term shareholders of Guangzhou Shiyuan Electronic Technology Company Limited (SZSE:002841), who have seen the share price tank a massive 74% over a three year period. That'd be enough to cause even the strongest minds some disquiet. And over the last year the share price fell 54%, so we doubt many shareholders are delighted.

After losing 5.0% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Check out our latest analysis for Guangzhou Shiyuan Electronic 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.

During the three years that the share price fell, Guangzhou Shiyuan Electronic Technology's earnings per share (EPS) dropped by 15% each year. This reduction in EPS is slower than the 36% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Guangzhou Shiyuan Electronic Technology's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 19% in the twelve months, Guangzhou Shiyuan Electronic Technology shareholders did even worse, losing 52% (even including dividends). 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. 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. It's always interesting to track share price performance over the longer term. But to understand Guangzhou Shiyuan Electronic Technology better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Guangzhou Shiyuan Electronic Technology , and understanding them should be part of your investment process.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.

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