It is a pleasure to report that the Anhui Zhonghuan Environmental Protection Technology Co.,Ltd (SZSE:300692) is up 52% in the last quarter. But we must note it seems the three year returns are less impressive. Specifically, the stock price is down 11% whereas the market is down , having returned (-10%).

Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Anhui Zhonghuan Environmental Protection TechnologyLtd's earnings per share (EPS) dropped by 30% each year. In comparison the 4% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term.

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 Anhui Zhonghuan Environmental Protection TechnologyLtd's earnings, revenue and cash flow.

A Different Perspective

Anhui Zhonghuan Environmental Protection TechnologyLtd provided a TSR of 3.3% over the last twelve months. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 1.1% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand Anhui Zhonghuan Environmental Protection TechnologyLtd better, we need to consider many other factors. For example, we've discovered 4 warning signs for Anhui Zhonghuan Environmental Protection TechnologyLtd (2 shouldn't be ignored!) that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.