As an investor its worth striving to ensure your overall portfolio beats the market average. 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 Poly Developments and Holdings Group Co., Ltd. (SHSE:600048) shareholders, since the share price is down 28% in the last three years, falling well short of the market decline of around 12%. And over the last year the share price fell 26%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 17% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 11% in the same timeframe.

If the past week is anything to go by, investor sentiment for Poly Developments and Holdings Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Poly Developments and Holdings Group

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.

During the three years that the share price fell, Poly Developments and Holdings Group's earnings per share (EPS) dropped by 11% each year. This fall in EPS isn't far from the rate of share price decline, which was 10% per year. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. In this case, it seems that the EPS is guiding the share price.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on Poly Developments and Holdings Group's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Poly Developments and Holdings Group the TSR over the last 3 years was -17%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

While the broader market lost about 5.0% in the twelve months, Poly Developments and Holdings Group shareholders did even worse, losing 24% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Poly Developments and Holdings Group better, we need to consider many other factors. For instance, we've identified 2 warning signs for Poly Developments and Holdings Group (1 doesn't sit too well with us) that you should be aware of.

We will like Poly Developments and Holdings Group better if we see some big insider buys. While we wait, check out this free list of growing companies 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.