Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Hubei Goto Biopharm Co.,Ltd. (SZSE:300966) have tasted that bitter downside in the last year, as the share price dropped 44%. That falls noticeably short of the market decline of around 1.4%. Because Hubei Goto BiopharmLtd hasn't been listed for many years, the market is still learning about how the business performs. Shareholders have had an even rougher run lately, with the share price down 15% in the last 90 days.

After losing 11% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Hubei Goto BiopharmLtd

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unfortunately Hubei Goto BiopharmLtd reported an EPS drop of 29% for the last year. This reduction in EPS is not as bad as the 44% share price fall. This suggests the EPS fall has made some shareholders are more nervous about 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 Hubei Goto BiopharmLtd's key metrics by checking this interactive graph of Hubei Goto BiopharmLtd's earnings, revenue and cash flow.

A Different Perspective

Hubei Goto BiopharmLtd shareholders are down 44% for the year (even including dividends), even worse than the market loss of 1.4%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 15%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. To that end, you should learn about the 3 warning signs we've spotted with Hubei Goto BiopharmLtd (including 2 which don't sit too well with us) .

Of course Hubei Goto BiopharmLtd 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 CN 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.