It can certainly be frustrating when a stock does not perform as hoped. But it's hard to avoid some disappointing investments when the overall market is down. The Sichuan Lutianhua Company Limited By Shares (SZSE:000912) share price is down 18% in the last three years. On the bright side, that's better than the market decline of 21%. More recently, the share price has dropped a further 11% in a month.

With the stock having lost 6.0% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

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.

During the three years that the share price fell, Sichuan Lutianhua Company Limited By Shares' earnings per share (EPS) dropped by 71% each year. In comparison the 6% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 584.37.

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

Dive deeper into Sichuan Lutianhua Company Limited By Shares' key metrics by checking this interactive graph of Sichuan Lutianhua Company Limited By Shares's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Sichuan Lutianhua Company Limited By Shares shareholders are down 17% for the year. Unfortunately, that's worse than the broader market decline of 9.6%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% 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. It's always interesting to track share price performance over the longer term. But to understand Sichuan Lutianhua Company Limited By Shares better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Sichuan Lutianhua Company Limited By Shares you should be aware of.

But note: Sichuan Lutianhua Company Limited By Shares may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.