It's nice to see the Shanghai Fortune Techgroup Co., Ltd. (SZSE:300493) share price up 19% in a week. It's not great that the stock is down over the last year. But at least it bettered the loss of 21% in its market.
On a more encouraging note the company has added CN¥505m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.
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, Shanghai Fortune Techgroup had to report a 41% decline in EPS over the last year. This fall in the EPS is significantly worse than the 15% the share price fall. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult. Indeed, with a P/E ratio of 81.44 there is obviously some real optimism that earnings will bounce back.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It might be well worthwhile taking a look at our free report on Shanghai Fortune Techgroup's earnings, revenue and cash flow.
A Different Perspective
Although it hurts that Shanghai Fortune Techgroup returned a loss of 15% in the last twelve months, the broader market was actually worse, returning a loss of 21%. Given the total loss of 2% per year over five years, it seems returns have deteriorated in the last twelve months. While some investors do well specializing in buying companies that are struggling (but nonetheless undervalued), don't forget that Buffett said that 'turnarounds seldom turn'. It's always interesting to track share price performance over the longer term. But to understand Shanghai Fortune Techgroup better, we need to consider many other factors. For example, we've discovered 2 warning signs for Shanghai Fortune Techgroup (1 is a bit concerning!) that you should be aware of before investing here.
Of course Shanghai Fortune Techgroup 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.