The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by Far East Smarter Energy Co., Ltd. (SHSE:600869) shareholders over the last year, as the share price declined 20%. That falls noticeably short of the market decline of around 3.9%. Longer term investors have fared much better, since the share price is up 14% in three years.

With the stock having lost 3.9% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Far East Smarter Energy

There is no denying that markets are sometimes efficient, but prices do not always reflect 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).

Unfortunately Far East Smarter Energy reported an EPS drop of 25% for the last year. The share price fall of 20% isn't as bad as the reduction in earnings per share. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We know that Far East Smarter Energy has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Far East Smarter Energy's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 3.9% in the twelve months, Far East Smarter Energy shareholders did even worse, losing 20%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.9% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Far East Smarter Energy better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Far East Smarter Energy .

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.