CHN Energy Changyuan Electric PowerLtd (SZSE:000966) investors are sitting on a loss of 61% if they invested three years ago

While not a mind-blowing move, it is good to see that the CHN Energy Changyuan Electric Power Co.,Ltd. (SZSE:000966) share price has gained 18% in the last three months. Meanwhile over the last three years the stock has dropped hard. In that time, the share price dropped 61%. So the improvement may be a real relief to some. After all, could be that the fall was overdone.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

See our latest analysis for CHN Energy Changyuan Electric PowerLtd

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During the three years that the share price fell, CHN Energy Changyuan Electric PowerLtd's earnings per share (EPS) dropped by 29% each year. This change in EPS is reasonably close to the 27% average annual decrease in the share price. 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.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that CHN Energy Changyuan Electric PowerLtd has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

A Different Perspective

The total return of 9.7% received by CHN Energy Changyuan Electric PowerLtd shareholders over the last year isn't far from the market return of -8.9%. Longer term investors wouldn't be so upset, since they would have made 0.8%, each year, over five years. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. 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. Even so, be aware that CHN Energy Changyuan Electric PowerLtd is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.