This month, we saw the Hylink Digital Solutions Co.,Ltd (SHSE:603825) up an impressive 35%. But that doesn't change the fact that the returns over the last year have been less than pleasing. The cold reality is that the stock has dropped 22% in one year, under-performing the market.

On a more encouraging note the company has added CN¥514m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last year Hylink Digital SolutionsLtd saw its earnings per share drop below zero. Buyers no doubt think it's a temporary situation, but those with a nose for quality have low tolerance for losses. We hope for shareholders' sake that the company becomes profitable again soon.

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

Dive deeper into Hylink Digital SolutionsLtd's key metrics by checking this interactive graph of Hylink Digital SolutionsLtd's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Hylink Digital SolutionsLtd shareholders are down 22% for the year. Unfortunately, that's worse than the broader market decline of 12%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. 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 Hylink Digital SolutionsLtd better, we need to consider many other factors. Even so, be aware that Hylink Digital SolutionsLtd is showing 2 warning signs in our investment analysis , you should know about...

Of course Hylink Digital SolutionsLtd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.