Wuhan Raycus Fiber Laser TechnologiesLtd's (SZSE:300747) earnings have declined over three years, contributing to shareholders 66% loss

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Wuhan Raycus Fiber Laser Technologies Co.,Ltd. (SZSE:300747) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 67% drop in the share price over that period. The more recent news is of little comfort, with the share price down 42% in a year. Furthermore, it's down 19% in about a quarter. That's not much fun for holders. But this could be related to the weak market, which is down 8.4% in the same period.

On a more encouraging note the company has added CN¥429m 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 Wuhan Raycus Fiber Laser TechnologiesLtd

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.

Wuhan Raycus Fiber Laser TechnologiesLtd saw its EPS decline at a compound rate of 26% per year, over the last three years. This fall in EPS isn't far from the rate of share price decline, which was 31% per year. That suggests that the market sentiment around the company hasn't changed much over that time, despite the disappointment. In this case, it seems that the EPS is guiding the share price.

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

We know that Wuhan Raycus Fiber Laser TechnologiesLtd has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

A Different Perspective

We regret to report that Wuhan Raycus Fiber Laser TechnologiesLtd shareholders are down 41% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 19%. 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 9% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Wuhan Raycus Fiber Laser TechnologiesLtd that you should be aware of.

Of course Wuhan Raycus Fiber Laser TechnologiesLtd 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.