Many investors define successful investing as beating the market average over the long term. But if you try your hand at stock picking, your risk returning less than the market. Unfortunately, that's been the case for longer term Tianjin Jingwei Huikai Optoelectronic Co., Ltd. (SZSE:300120) shareholders, since the share price is down 50% in the last three years, falling well short of the market decline of around 12%. Furthermore, it's down 16% in about a quarter. That's not much fun for holders. But this could be related to the weak market, which is down 8.2% in the same period.

Since Tianjin Jingwei Huikai Optoelectronic has shed CN¥368m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Tianjin Jingwei Huikai Optoelectronic

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.

Tianjin Jingwei Huikai Optoelectronic saw its EPS decline at a compound rate of 45% per year, over the last three years. This fall in the EPS is worse than the 20% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. This positive sentiment is also reflected in the generous P/E ratio of 141.75.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

This free interactive report on Tianjin Jingwei Huikai Optoelectronic's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Tianjin Jingwei Huikai Optoelectronic shareholders have received a total shareholder return of 2.0% over the last year. And that does include the dividend. However, that falls short of the 4% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. 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. To that end, you should learn about the 4 warning signs we've spotted with Tianjin Jingwei Huikai Optoelectronic (including 1 which can't be ignored) .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.