The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Tianjin Chase Sun Pharmaceutical Co.,Ltd (SZSE:300026) shareholders over the last year, as the share price declined 40%. That contrasts poorly with the market decline of 17%. At least the damage isn't so bad if you look at the last three years, since the stock is down 27% in that time. Shareholders have had an even rougher run lately, with the share price down 15% in the last 90 days.

While the last year has been tough for Tianjin Chase Sun PharmaceuticalLtd shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unfortunately Tianjin Chase Sun PharmaceuticalLtd reported an EPS drop of 31% for the last year. This reduction in EPS is not as bad as the 40% share price fall. This suggests the EPS fall has made some shareholders more nervous about the business.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

It might be well worthwhile taking a look at our free report on Tianjin Chase Sun PharmaceuticalLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 17% in the twelve months, Tianjin Chase Sun PharmaceuticalLtd shareholders did even worse, losing 40% (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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.5% 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. 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 instance, we've identified 2 warning signs for Tianjin Chase Sun PharmaceuticalLtd that you should be aware of.

For those who like to find winning investments this free list of undervalued 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com