It's not possible to invest over long periods without making some bad investments. But really bad investments should be rare. So spare a thought for the long term shareholders of Jiangsu AMER New Material Co., Ltd. (SZSE:002201); the share price is down a whopping 80% in the last three years. That would certainly shake our confidence in the decision to own the stock. And over the last year the share price fell 57%, so we doubt many shareholders are delighted. Furthermore, it's down 29% in about a quarter. That's not much fun for holders. However, one could argue that the price has been influenced by the general market, which is down 13% in the same timeframe. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Jiangsu AMER New Material's earnings per share (EPS) dropped by 0.2% each year. The share price decline of 42% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. Having said that, the market is still optimistic, given the P/E ratio of 65.07.

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

Dive deeper into Jiangsu AMER New Material's key metrics by checking this interactive graph of Jiangsu AMER New Material's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 19% in the twelve months, Jiangsu AMER New Material shareholders did even worse, losing 57% (even including dividends). 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. 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 Jiangsu AMER New Material better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Jiangsu AMER New Material .

Of course Jiangsu AMER New Material may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.