The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Nanjing Canatal Data-Centre Environmental Tech Co., Ltd (SHSE:603912) shareholders over the last year, as the share price declined 35%. That falls noticeably short of the market decline of around 20%. At least the damage isn't so bad if you look at the last three years, since the stock is down 10% in that time. Unfortunately the share price momentum is still quite negative, with prices down 22% in thirty days. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.

If the past week is anything to go by, investor sentiment for Nanjing Canatal Data-Centre Environmental Tech 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...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Unhappily, Nanjing Canatal Data-Centre Environmental Tech had to report a 22% decline in EPS over the last year. The share price decline of 35% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. Of course, with a P/E ratio of 96.96, the market remains optimistic.

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

It might be well worthwhile taking a look at our free report on Nanjing Canatal Data-Centre Environmental Tech's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 20% in the twelve months, Nanjing Canatal Data-Centre Environmental Tech shareholders did even worse, losing 35% (even including dividends). 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 4% 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. It's always interesting to track share price performance over the longer term. But to understand Nanjing Canatal Data-Centre Environmental Tech better, we need to consider many other factors. Even so, be aware that Nanjing Canatal Data-Centre Environmental Tech is showing 3 warning signs in our investment analysis , you should know about...

Of course Nanjing Canatal Data-Centre Environmental Tech 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.