The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in Guangdong Shenglu Telecommunication Tech. Co., Ltd. (SZSE:002446), since the last five years saw the share price fall 34%. We also note that the stock has performed poorly over the last year, with the share price down 22%. More recently, the share price has dropped a further 13% in a month. However, we note the price may have been impacted by the broader market, which is down 6.1% in the same time period.

If the past week is anything to go by, investor sentiment for Guangdong Shenglu Telecommunication Tech isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).

Over five years Guangdong Shenglu Telecommunication Tech's earnings per share dropped significantly, falling to a loss, with the share price also lower. This was, in part, due to extraordinary items impacting earnings. At present it's hard to make valid comparisons between EPS and the share price. But we would generally expect a lower price, given the situation.

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

We know that Guangdong Shenglu Telecommunication Tech has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Guangdong Shenglu Telecommunication Tech stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Investors in Guangdong Shenglu Telecommunication Tech had a tough year, with a total loss of 22%, against a market gain of about 7.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. 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. You could get a better understanding of Guangdong Shenglu Telecommunication Tech's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

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.