Investors in Shenzhen Airport (SZSE:000089) have unfortunately lost 42% over the last five years

For many, the main point of investing is to generate higher returns than the overall market. But even the best stock picker will only win with some selections. So we wouldn't blame long term Shenzhen Airport Co., Ltd. (SZSE:000089) shareholders for doubting their decision to hold, with the stock down 43% over a half decade. Furthermore, it's down 11% in about a quarter. That's not much fun for holders. However, one could argue that the price has been influenced by the general market, which is down 12% in the same timeframe.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

See our latest analysis for Shenzhen Airport

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Shenzhen Airport became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.

The modest 1.7% dividend yield is unlikely to be guiding the market view of the stock. In contrast to the share price, revenue has actually increased by 2.2% a year in the five year period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Shenzhen Airport is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Shenzhen Airport stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

While it's never nice to take a loss, Shenzhen Airport shareholders can take comfort that , including dividends,their trailing twelve month loss of 13% wasn't as bad as the market loss of around 20%. Unfortunately, last year's performance may indicate unresolved challenges, given that it's worse than the annualised loss of 7% over the last half decade. Whilst Baron Rothschild does tell the investor "buy when there's blood in the streets, even if the blood is your own", buyers would need to examine the data carefully to be comfortable that the business itself is sound. It's always interesting to track share price performance over the longer term. But to understand Shenzhen Airport better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Shenzhen Airport you should know about.

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.