It's normal to be annoyed when stock you own has a declining share price. But often it is not a reflection of the fundamental business performance. The Zhejiang Changsheng Sliding Bearings Co., Ltd. (SZSE:300718) is down 18% over a year, but the total shareholder return is -16% once you include the dividend. That's better than the market which declined 20% over the last year. The silver lining (for longer term investors) is that the stock is still 7.4% higher than it was three years ago. More recently, the share price has dropped a further 15% in a month. But this could be related to poor market conditions -- stocks are down 6.3% in the same time.

With the stock having lost 13% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

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.

Unhappily, Zhejiang Changsheng Sliding Bearings had to report a 9.3% decline in EPS over the last year. This reduction in EPS is not as bad as the 18% share price fall. So it seems the market was too confident about the business, a year ago.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Zhejiang Changsheng Sliding Bearings the TSR over the last 1 year was -16%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

While it's certainly disappointing to see that Zhejiang Changsheng Sliding Bearings shares lost 16% throughout the year, that wasn't as bad as the market loss of 20%. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Zhejiang Changsheng Sliding Bearings better, we need to consider many other factors. For instance, we've identified 2 warning signs for Zhejiang Changsheng Sliding Bearings that you should be aware of.

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 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.