China Daye Non-Ferrous Metals Mining's (HKG:661 three-year decrease in earnings delivers investors with a 14% loss

It is doubtless a positive to see that the China Daye Non-Ferrous Metals Mining Limited (HKG:661) share price has gained some 30% in the last three months. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 14% in the last three years, significantly under-performing the market.

With the stock having lost 11% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

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While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).

China Daye Non-Ferrous Metals Mining became profitable within the last five years. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.

We note that, in three years, revenue has actually grown at a 20% annual rate, so that doesn't seem to be a reason to sell shares. This analysis is just perfunctory, but it might be worth researching China Daye Non-Ferrous Metals Mining more closely, as sometimes stocks fall unfairly. This could present 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).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on China Daye Non-Ferrous Metals Mining's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 45% in the last year, China Daye Non-Ferrous Metals Mining shareholders lost 3.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 2% 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. It's always interesting to track share price performance over the longer term. But to understand China Daye Non-Ferrous Metals Mining better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with China Daye Non-Ferrous Metals Mining (including 1 which is potentially serious) .

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 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.