If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Shanghai New Power Automotive Technology Company Limited (SHSE:600841) shareholders know that all too well, since the share price is down considerably over three years. So they might be feeling emotional about the 56% share price collapse, in that time. And over the last year the share price fell 39%, so we doubt many shareholders are delighted. Shareholders have had an even rougher run lately, with the share price down 32% in the last 90 days.

While the last three years has been tough for Shanghai New Power Automotive Technology shareholders, this past week has shown signs of promise. So let’s look at the longer term fundamentals and see if they’ve been the driver of the negative returns.

See our latest analysis for Shanghai New Power Automotive Technology

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.

Over the three years that the share price declined, Shanghai New Power Automotive Technology’s earnings per share (EPS) dropped significantly, falling to a loss. Due to the loss, it’s not easy to use EPS as a reliable guide to the business. However, we can say we’d expect to see a falling share price in this scenario.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

This free interactive report on Shanghai New Power Automotive Technology’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 17% in the twelve months, Shanghai New Power Automotive Technology shareholders did even worse, losing 39%. 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. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 8% per year over five years. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. 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. To that end, you should be aware of the 1 warning sign we’ve spotted with Shanghai New Power Automotive Technology .

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.