Most people feel a little frustrated if a stock they own goes down in price. But often it is not a reflection of the fundamental business performance. So while the Jiuzhitang Co., Ltd. (SZSE:000989) share price is down 12% in the last year, the total return to shareholders (which includes dividends) was -9.6%. That's better than the market which declined 24% over the last year. The silver lining (for longer term investors) is that the stock is still 6.2% higher than it was three years ago. The share price has dropped 22% in three months. However, one could argue that the price has been influenced by the general market, which is down 14% in the same timeframe.

After losing 6.4% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Jiuzhitang

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Unfortunately Jiuzhitang reported an EPS drop of 34% for the last year. The share price fall of 12% isn't as bad as the reduction in earnings per share. It may have been that the weak EPS was not as bad as some had feared.

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

It might be well worthwhile taking a look at our free report on Jiuzhitang'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. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Jiuzhitang's TSR for the last 1 year was -9.6%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While it's never nice to take a loss, Jiuzhitang shareholders can take comfort that , including dividends,their trailing twelve month loss of 9.6% wasn't as bad as the market loss of around 24%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 1.9% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. 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. Even so, be aware that Jiuzhitang is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

Of course Jiuzhitang 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.