As an investor, mistakes are inevitable. But really bad investments should be rare. So consider, for a moment, the misfortune of China Baoan Group Co., Ltd. (SZSE:000009) investors who have held the stock for three years as it declined a whopping 73%. That would be a disturbing experience. And the ride hasn't got any smoother in recent times over the last year, with the price 29% lower in that time. Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days. But this could be related to the weak market, which is down 12% in the same period.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

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.

During the three years that the share price fell, China Baoan Group's earnings per share (EPS) dropped by 10% each year. The share price decline of 36% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into China Baoan Group's key metrics by checking this interactive graph of China Baoan Group's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 16% in the twelve months, China Baoan Group shareholders did even worse, losing 29% (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. Longer term investors wouldn't be so upset, since they would have made 10%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Case in point: We've spotted 1 warning sign for China Baoan Group you should be aware of.

Of course China Baoan Group 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.