Shenzhen Longood Intelligent ElectricLTD's (SZSE:300543) three-year decline in earnings translates into losses for shareholders

It's nice to see the Shenzhen Longood Intelligent Electric Co.,LTD (SZSE:300543) share price up 27% in a week. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 27% in the last three years, falling well short of the market return.

On a more encouraging note the company has added CN¥552m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

Check out our latest analysis for Shenzhen Longood Intelligent ElectricLTD

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

Shenzhen Longood Intelligent ElectricLTD saw its EPS decline at a compound rate of 40% per year, over the last three years. In comparison the 10% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 63.94.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

This free interactive report on Shenzhen Longood Intelligent ElectricLTD's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While it's certainly disappointing to see that Shenzhen Longood Intelligent ElectricLTD shares lost 4.1% throughout the year, that wasn't as bad as the market loss of 6.0%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 0.4% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Shenzhen Longood Intelligent ElectricLTD better, we need to consider many other factors. Take risks, for example - Shenzhen Longood Intelligent ElectricLTD has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

But note: Shenzhen Longood Intelligent ElectricLTD 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.