Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the Qingdao Tianneng Heavy Industries Co.,Ltd (SZSE:300569) share price slid 43% over twelve months. That falls noticeably short of the market decline of around 15%. Even if you look out three years, the returns are still disappointing, with the share price down42% in that time. Shareholders have had an even rougher run lately, with the share price down 31% in the last 90 days.

If the past week is anything to go by, investor sentiment for Qingdao Tianneng Heavy IndustriesLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

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. 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.

Unfortunately Qingdao Tianneng Heavy IndustriesLtd reported an EPS drop of 5.9% for the last year. The share price decline of 43% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders are more nervous about the business.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It might be well worthwhile taking a look at our free report on Qingdao Tianneng Heavy IndustriesLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 15% in the twelve months, Qingdao Tianneng Heavy IndustriesLtd shareholders did even worse, losing 43% (even including dividends). 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. On the bright side, long term shareholders have made money, with a gain of 2% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. For example, we've discovered 2 warning signs for Qingdao Tianneng Heavy IndustriesLtd that you should be aware of before investing here.

But note: Qingdao Tianneng Heavy IndustriesLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.