If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Anhui Yingliu Electromechanical Co., Ltd. (SHSE:603308) have had an unfortunate run in the last three years. So they might be feeling emotional about the 58% share price collapse, in that time. And over the last year the share price fell 54%, so we doubt many shareholders are delighted. Unfortunately the share price momentum is still quite negative, with prices down 30% in thirty days.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

View our latest analysis for Anhui Yingliu Electromechanical

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. 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.

During the unfortunate three years of share price decline, Anhui Yingliu Electromechanical actually saw its earnings per share (EPS) improve by 38% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

With a rather small yield of just 1.8% we doubt that the stock's share price is based on its dividend. Revenue is actually up 9.0% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Anhui Yingliu Electromechanical further; while we may be missing something on this analysis, there might also be an opportunity.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how Anhui Yingliu Electromechanical has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Anhui Yingliu Electromechanical stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market lost about 21% in the twelve months, Anhui Yingliu Electromechanical shareholders did even worse, losing 53% (even including dividends). 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. On the bright side, long term shareholders have made money, with a gain of 9% 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. 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. Case in point: We've spotted 3 warning signs for Anhui Yingliu Electromechanical you should be aware of, and 1 of them doesn't sit too well with us.

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 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.