If you love investing in stocks you're bound to buy some losers. Long term Liaoning Cheng Da Co., Ltd. (SHSE:600739) shareholders know that all too well, since the share price is down considerably over three years. Regrettably, they have had to cope with a 64% drop in the share price over that period. The more recent news is of little comfort, with the share price down 42% in a year. The falls have accelerated recently, with the share price down 24% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 13% in the same timeframe.

After losing 4.2% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Liaoning Cheng Da saw its EPS decline at a compound rate of 82% per year, over the last three years. This fall in the EPS is worse than the 29% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 681.19.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Liaoning Cheng Da's key metrics by checking this interactive graph of Liaoning Cheng Da's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Liaoning Cheng Da shareholders are down 42% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 15%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% per year over five years. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Liaoning Cheng Da is showing 4 warning signs in our investment analysis , and 2 of those are potentially serious...

But note: Liaoning Cheng Da 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.

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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.