It can certainly be frustrating when a stock does not perform as hoped. But no-one can make money on every call, especially in a declining market. The Wuxi Boton Technology Co., Ltd. (SZSE:300031) is down 15% over three years, but the total shareholder return is -13% once you include the dividend. That's better than the market which declined 28% over the last three years. The last month has also been disappointing, with the stock slipping a further 26%. We do note, however, that the broader market is down 13% in that period, and this may have weighed on the share price.

Since Wuxi Boton Technology has shed CN¥1.1b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Wuxi Boton Technology

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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the three years that the share price declined, Wuxi Boton Technology's earnings per share (EPS) dropped significantly, falling to a loss. This was, in part, due to extraordinary items impacting earnings. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. But it's safe to say we'd generally expect the share price to be lower as a result!

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Wuxi Boton Technology's earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Wuxi Boton Technology's total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that Wuxi Boton Technology's TSR, which was a 13% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

While it's never nice to take a loss, Wuxi Boton Technology shareholders can take comfort that their trailing twelve month loss of 8.4% 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 3% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Wuxi Boton Technology you should know about.

Of course Wuxi Boton Technology 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.