Investing in stocks comes with the risk that the share price will fall. And there's no doubt that Tayho Advanced Materials Group Co., Ltd. (SZSE:002254) stock has had a really bad year. The share price has slid 64% in that time. Even if you look out three years, the returns are still disappointing, with the share price down45% in that time. Shareholders have had an even rougher run lately, with the share price down 41% in the last 90 days. But this could be related to the weak market, which is down 21% in the same period.

If the past week is anything to go by, investor sentiment for Tayho Advanced Materials Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Unhappily, Tayho Advanced Materials Group had to report a 34% decline in EPS over the last year. The share price decline of 64% is actually more than the EPS drop. 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).

This free interactive report on Tayho Advanced Materials Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

We regret to report that Tayho Advanced Materials Group shareholders are down 63% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 28%. 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 0.5% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope 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. Case in point: We've spotted 2 warning signs for Tayho Advanced Materials Group you should be aware of, and 1 of them doesn't sit too well with us.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.