Ideally, your overall portfolio should beat the market average. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in Hebei Sailhero Environmental Protection High-tech Co.,Ltd (SZSE:300137), since the last five years saw the share price fall 45%. We also note that the stock has performed poorly over the last year, with the share price down 26%. Shareholders have had an even rougher run lately, with the share price down 24% in the last 90 days. Of course, this share price action may well have been influenced by the 15% decline in the broader market, throughout the period.
Since Hebei Sailhero Environmental Protection High-techLtd has shed CN¥392m 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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
In the last half decade Hebei Sailhero Environmental Protection High-techLtd saw its share price fall as its EPS declined below zero. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
What About The Total Shareholder Return (TSR)?
We've already covered Hebei Sailhero Environmental Protection High-techLtd's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Hebei Sailhero Environmental Protection High-techLtd's TSR, which was a 43% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
Hebei Sailhero Environmental Protection High-techLtd shareholders are down 26% over twelve months, which isn't far from the market return of -25%. Unfortunately, last year's performance is a deterioration of an already poor long term track record, given the loss of 7% per year over the last five years. Weak performance over the long term usually destroys market confidence in a stock, but bargain hunters may want to take a closer look for signs of a turnaround. 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. Even so, be aware that Hebei Sailhero Environmental Protection High-techLtd is showing 1 warning sign in our investment analysis , you should know about...
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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.