Most people feel a little frustrated if a stock they own goes down in price. But sometimes broader market conditions have more of an impact on prices than the actual business performance. The Guangzhou Haige Communications Group Incorporated Company (SZSE:002465) is down 10% over a year, but the total shareholder return is -9.0% once you include the dividend. That's better than the market which declined 15% over the last year. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 2.2% in three years. In the last ninety days we've seen the share price slide 18%.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

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 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).

Even though the Guangzhou Haige Communications Group share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past.

By glancing at these numbers, we'd posit that the the market had expectations of much higher growth, last year. But other metrics might shed some light on why the share price is down.

With a low yield of 1.6% we doubt that the dividend influences the share price much. Guangzhou Haige Communications Group 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).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

While it's never nice to take a loss, Guangzhou Haige Communications Group shareholders can take comfort that , including dividends,their trailing twelve month loss of 9.0% wasn't as bad as the market loss of around 15%. Longer term investors wouldn't be so upset, since they would have made 0.9%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Guangzhou Haige Communications Group has 2 warning signs we think you should be aware of.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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