Zhong An Group Limited (HKG:672) shareholders should be happy to see the share price up 18% in the last month. But that doesn't change the fact that the returns over the last three years have been disappointing. Regrettably, the share price slid 59% in that period. So it is really good to see an improvement. After all, could be that the fall was overdone.

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.

View our latest analysis for Zhong An Group

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).

Zhong An Group saw its EPS decline at a compound rate of 13% per year, over the last three years. The share price decline of 26% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 1.94.

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

It might be well worthwhile taking a look at our free report on Zhong An Group's earnings, revenue and cash flow.

A Different Perspective

Zhong An Group shareholders gained a total return of 17% during the year. But that return falls short of the market. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 6% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Zhong An Group better, we need to consider many other factors. To that end, you should learn about the 5 warning signs we've spotted with Zhong An Group (including 1 which is potentially serious) .

We will like Zhong An Group better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.

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