Positive earnings growth hasn't been enough to get Jiangsu Jiangnan Water (SHSE:601199) shareholders a favorable return over the last year

Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Jiangsu Jiangnan Water Co., Ltd. (SHSE:601199) share price is down 44% in the last year. That contrasts poorly with the market decline of 15%. The silver lining (for longer term investors) is that the stock is still 33% higher than it was three years ago. But it's up 8.6% in the last week.

The recent uptick of 8.6% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for Jiangsu Jiangnan Water

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Even though the Jiangsu Jiangnan Water share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's well worth checking out some other metrics, too.

Given the yield is quite low, at 1.8%, we doubt the dividend can shed much light on the share price. Jiangsu Jiangnan Water's revenue is actually up 24% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Jiangsu Jiangnan Water's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 15% in the twelve months, Jiangsu Jiangnan Water shareholders did even worse, losing 43% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 6% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Take risks, for example - Jiangsu Jiangnan Water has 1 warning sign we think you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.