The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. For example, the Eastcompeace Technology Co.Ltd (SZSE:002017) share price is down 31% in the last year. That's disappointing when you consider the market declined 14%. Longer term investors have fared much better, since the share price is up 6.9% in three years. Unfortunately the share price momentum is still quite negative, with prices down 10% in thirty days. We do note, however, that the broader market is down 4.5% in that period, and this may have weighed on the share price.

The recent uptick of 8.9% could be a positive sign of things to come, so let's take a look at historical fundamentals.

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. 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 unfortunate twelve months during which the Eastcompeace TechnologyLtd share price fell, it actually saw its earnings per share (EPS) improve by 87%. It's quite possible that growth expectations may have been unreasonable in the past.

It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.

With a low yield of 0.9% we doubt that the dividend influences the share price much. Eastcompeace TechnologyLtd's revenue is actually up 7.5% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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 Eastcompeace TechnologyLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 14% in the twelve months, Eastcompeace TechnologyLtd shareholders did even worse, losing 31% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% per year over five years. 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. It's always interesting to track share price performance over the longer term. But to understand Eastcompeace TechnologyLtd better, we need to consider many other factors. For example, we've discovered 1 warning sign for Eastcompeace TechnologyLtd that you should be aware of before investing here.

But note: Eastcompeace TechnologyLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.