Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Guangdong Dowstone Technology Co., Ltd. (SZSE:300409) have suffered share price declines over the last year. The share price has slid 57% in that time. Even if you look out three years, the returns are still disappointing, with the share price down53% in that time. The falls have accelerated recently, with the share price down 40% in the last three months. But this could be related to the weak market, which is down 19% in the same period.

After losing 26% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

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 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).

During the last year Guangdong Dowstone Technology saw its earnings per share drop below zero. Some investors no doubt dumped the stock as a result. However, there may be an opportunity for investors if the company can recover.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Guangdong Dowstone Technology's key metrics by checking this interactive graph of Guangdong Dowstone Technology's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Guangdong Dowstone Technology shareholders are down 57% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 26%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.