Shandong Weigao Group Medical Polymer (HKG:1066) stock falls 8.4% in past week as three-year earnings and shareholder returns continue downward trend

As an investor its worth striving to ensure your overall portfolio beats the market average. But if you try your hand at stock picking, you risk returning less than the market. We regret to report that long term Shandong Weigao Group Medical Polymer Company Limited (HKG:1066) shareholders have had that experience, with the share price dropping 53% in three years, versus a market decline of about 4.8%. And more recent buyers are having a tough time too, with a drop of 37% in the last year. And the share price decline continued over the last week, dropping some 8.4%.

After losing 8.4% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Shandong Weigao Group Medical Polymer

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Shandong Weigao Group Medical Polymer saw its EPS decline at a compound rate of 6.5% per year, over the last three years. The share price decline of 22% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 10.29.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Shandong Weigao Group Medical Polymer's key metrics by checking this interactive graph of Shandong Weigao Group Medical Polymer's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Shandong Weigao Group Medical Polymer, it has a TSR of -48% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Investors in Shandong Weigao Group Medical Polymer had a tough year, with a total loss of 34% (including dividends), against a market gain of about 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% 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. To that end, you should be aware of the 1 warning sign we've spotted with Shandong Weigao Group Medical Polymer .

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.