No-one enjoys it when they lose money on a stock. But when the market is down, you're bound to have some losers. The Hubei Jiuzhiyang Infrared System Co., Ltd (SZSE:300516) is down 16% over three years, but the total shareholder return is -15% once you include the dividend. That's better than the market which declined 19% over the last three years. The share price has dropped 22% in three months.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Hubei Jiuzhiyang Infrared System saw its EPS decline at a compound rate of 13% per year, over the last three years. This fall in the EPS is worse than the 6% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in. This positive sentiment is also reflected in the generous P/E ratio of 94.58.

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

Dive deeper into Hubei Jiuzhiyang Infrared System's key metrics by checking this interactive graph of Hubei Jiuzhiyang Infrared System's earnings, revenue and cash flow.

A Different Perspective

Hubei Jiuzhiyang Infrared System shareholders gained a total return of 5.1% during the year. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 0.7% over half a decade It is possible that returns will improve along with the business fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 1 warning sign for Hubei Jiuzhiyang Infrared System that you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.