No-one enjoys it when they lose money on a stock. But it can difficult to make money in a declining market. The Shenzhen Das Intellitech Co., Ltd. (SZSE:002421) is down 21% over three years, but the total shareholder return is -19% once you include the dividend. And that total return actually beats the market decline of 19%. It's down 22% in about a month. But this could be related to poor market conditions -- stocks are down 9.1% in the same time.

Since Shenzhen Das Intellitech has shed CN¥1.0b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

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 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.

Shenzhen Das Intellitech saw its EPS decline at a compound rate of 48% per year, over the last three years. In comparison the 7% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. With a P/E ratio of 115.54, it's fair to say the market sees a brighter future for the business.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into Shenzhen Das Intellitech's key metrics by checking this interactive graph of Shenzhen Das Intellitech's earnings, revenue and cash flow.

A Different Perspective

Investors in Shenzhen Das Intellitech had a tough year, with a total loss of 3.5% (including dividends), against a market gain of about 7.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 3% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Shenzhen Das Intellitech you should be aware of, and 1 of them doesn't sit too well with us.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.