If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the last three years have been particularly tough on longer term Zhejiang Chint Electrics Co., Ltd. (SHSE:601877) shareholders. Unfortunately, they have held through a 64% decline in the share price in that time. On the other hand the share price has bounced 8.1% over the last week.

While the last three years has been tough for Zhejiang Chint Electrics 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.

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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Zhejiang Chint Electrics saw its EPS decline at a compound rate of 17% per year, over the last three years. The share price decline of 29% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 10.95.

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

Dive deeper into Zhejiang Chint Electrics' key metrics by checking this interactive graph of Zhejiang Chint Electrics's earnings, revenue and cash flow.

A Different Perspective

The total return of 20% received by Zhejiang Chint Electrics shareholders over the last year isn't far from the market return of -19%. So last year was actually even worse than the last five years, which cost shareholders 2% per year. Weak performance over the long term usually destroys market confidence in a stock, but bargain hunters may want to take a closer look for signs of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Zhejiang Chint Electrics better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Zhejiang Chint Electrics .

But note: Zhejiang Chint Electrics 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.