In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Sun Create Electronics Co., Ltd (SHSE:600990) shareholders, since the share price is down 19% in the last three years, falling well short of the market decline of around 12%. The falls have accelerated recently, with the share price down 12% in the last three months. But this could be related to the weak market, which is down 8.2% in the same period.

Since Sun Create Electronics has shed CN¥436m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Sun Create Electronics

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

Sun Create Electronics saw its EPS decline at a compound rate of 21% per year, over the last three years. This fall in the EPS is worse than the 7% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in. This positive sentiment is also reflected in the generous P/E ratio of 80.60.

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

This free interactive report on Sun Create Electronics' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Sun Create Electronics shareholders are down 5.7% over twelve months (even including dividends), which isn't far from the market return of -5.8%. Unfortunately, last year's performance is a deterioration of an already poor long term track record, given the loss of 1.1% per year over the last five years. It will probably take a substantial improvement in the fundamental performance for the company to reverse this trend. 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. Even so, be aware that Sun Create Electronics is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

Of course Sun Create Electronics may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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