The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the SINOMACH HEAVY EQUIPMENT GROUP CO.,LTD (SHSE:601399) share price slid 19% over twelve months. That's disappointing when you consider the market declined 5.4%. SINOMACH HEAVY EQUIPMENT GROUPLTD may have better days ahead, of course; we've only looked at a one year period.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

Check out our latest analysis for SINOMACH HEAVY EQUIPMENT GROUPLTD

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.

During the unfortunate twelve months during which the SINOMACH HEAVY EQUIPMENT GROUPLTD share price fell, it actually saw its earnings per share (EPS) improve by 21%. Of course, the situation might betray previous over-optimism about growth.

The divergence between the EPS and the share price is quite notable, during the year. So it's easy to justify a look at some other metrics.

Revenue was pretty flat on last year, which isn't too bad. But the share price might be lower because the market expected a meaningful improvement, and got none.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on SINOMACH HEAVY EQUIPMENT GROUPLTD's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

SINOMACH HEAVY EQUIPMENT GROUPLTD shareholders are down 19% for the year, even worse than the market loss of 5.4%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. It's great to see a nice little 1.9% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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. Take risks, for example - SINOMACH HEAVY EQUIPMENT GROUPLTD has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CN 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.