Guangdong KinLong Hardware ProductsLtd (SZSE:002791) earnings and shareholder returns have been trending downwards for the last three years, but the stock climbs 8.3% this past week

As an investor, mistakes are inevitable. But really bad investments should be rare. So consider, for a moment, the misfortune of Guangdong KinLong Hardware Products Co.,Ltd. (SZSE:002791) investors who have held the stock for three years as it declined a whopping 85%. That'd be enough to cause even the strongest minds some disquiet. The more recent news is of little comfort, with the share price down 62% in a year. Shareholders have had an even rougher run lately, with the share price down 42% in the last 90 days. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

The recent uptick of 8.3% could be a positive sign of things to come, so let's take a look at historical fundamentals.

View our latest analysis for Guangdong KinLong Hardware ProductsLtd

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).

Guangdong KinLong Hardware ProductsLtd saw its EPS decline at a compound rate of 26% per year, over the last three years. This reduction in EPS is slower than the 47% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Guangdong KinLong Hardware ProductsLtd's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 11% in the twelve months, Guangdong KinLong Hardware ProductsLtd shareholders did even worse, losing 62% (even including dividends). 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. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before forming an opinion on Guangdong KinLong Hardware ProductsLtd you might want to consider these 3 valuation metrics.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.