The nature of investing is that you win some, and you lose some. And unfortunately for Shinghwa Advanced Material Group Co., Ltd. (SHSE:603026) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 69%. To make matters worse, the returns over three years have also been really disappointing (the share price is 45% lower than three years ago). The falls have accelerated recently, with the share price down 39% in the last three months. Of course, this share price action may well have been influenced by the 19% decline in the broader market, throughout the period.

After losing 22% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Unhappily, Shinghwa Advanced Material Group had to report a 92% decline in EPS over the last year. This fall in the EPS is significantly worse than the 69% the share price fall. It may have been that the weak EPS was not as bad as some had feared. With a P/E ratio of 65.87, it's fair to say the market sees an EPS rebound on the cards.

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

It might be well worthwhile taking a look at our free report on Shinghwa Advanced Material Group's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Shinghwa Advanced Material Group shareholders are down 69% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 26%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 10%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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 - Shinghwa Advanced Material Group has 3 warning signs (and 1 which is a bit unpleasant) 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 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.