The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Fujian Zhangzhou Development Co.,LTD. (SZSE:000753) share price slid 32% over twelve months. That falls noticeably short of the market decline of around 16%. The silver lining (for longer term investors) is that the stock is still 8.9% higher than it was three years ago. Shareholders have had an even rougher run lately, with the share price down 20% in the last 90 days.

After losing 12% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unfortunately Fujian Zhangzhou DevelopmentLTD reported an EPS drop of 66% for the last year. This fall in the EPS is significantly worse than the 32% 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 68.90, it's fair to say the market sees an EPS rebound on the cards.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Fujian Zhangzhou DevelopmentLTD's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 16% in the twelve months, Fujian Zhangzhou DevelopmentLTD shareholders did even worse, losing 32% (even including dividends). 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Fujian Zhangzhou DevelopmentLTD better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Fujian Zhangzhou DevelopmentLTD you should be aware of, and 2 of them shouldn't be ignored.

We will like Fujian Zhangzhou DevelopmentLTD better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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.