Investors can earn very close to the average market return by buying an index fund. In contrast individual stocks will provide a wide range of possible returns, and may fall short. One such example is Genimous Technology Co., Ltd. (SZSE:000676), which saw its share price fall 18% over a year, against a market decline of 17%. However, the longer term returns haven't been so bad, with the stock down 7.7% in the last three years. More recently, the share price has dropped a further 15% in a month.

With the stock having lost 5.3% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

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.

Genimous Technology managed to increase earnings per share from a loss to a profit, over the last 12 months.

Earnings per share growth rates aren't particularly useful for comparing with the share price, when a company has moved from loss to profit. But we may find different metrics more enlightening.

Genimous Technology managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

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 Genimous Technology's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

The total return of 18% received by Genimous Technology shareholders over the last year isn't far from the market return of -17%. So last year was actually even worse than the last five years, which cost shareholders 2% per year. It will probably take a substantial improvement in the fundamental performance for the company to reverse this trend. Is Genimous Technology cheap compared to other companies? These 3 valuation measures might help you decide.

We will like Genimous Technology better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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.

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