Shandong Weigao Group Medical Polymer (HKG:1066) earnings and shareholder returns have been trending downwards for the last three years, but the stock increases 3.0% this past week

Shandong Weigao Group Medical Polymer Company Limited (HKG:1066) shareholders should be happy to see the share price up 15% in the last month. Meanwhile over the last three years the stock has dropped hard. Tragically, the share price declined 70% in that time. So the improvement may be a real relief to some. The rise has some hopeful, but turnarounds are often precarious.

The recent uptick of 3.0% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for Shandong Weigao Group Medical Polymer

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 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).

During the three years that the share price fell, Shandong Weigao Group Medical Polymer's earnings per share (EPS) dropped by 2.0% each year. The share price decline of 33% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 11.46.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

Shandong Weigao Group Medical Polymer shareholders are down 56% for the year (even including dividends), but the market itself is up 3.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Shandong Weigao Group Medical Polymer better, we need to consider many other factors. For instance, we've identified 1 warning sign for Shandong Weigao Group Medical Polymer that you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong 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.