Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. For example, after five long years the Wison Engineering Services Co. Ltd. (HKG:2236) share price is a whole 71% lower. That's not a lot of fun for true believers. And some of the more recent buyers are probably worried, too, with the stock falling 33% in the last year. It's down 2.5% in the last seven days.

View our latest analysis for Wison Engineering Services

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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).

Looking back five years, both Wison Engineering Services's share price and EPS declined; the latter at a rate of 22% per year. In this case, the EPS change is really very close to the share price drop of 22% a year. That suggests that the market sentiment around the company hasn't changed much over that time. So it's fair to say the share price has been responding to changes in EPS.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Wison Engineering Services the TSR over the last 5 years was -69%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We regret to report that Wison Engineering Services shareholders are down 33% for the year (even including dividends) . Unfortunately, that's worse than the broader market decline of 7.6%. 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 21% 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. 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. Even so, be aware that Wison Engineering Services is showing 4 warning signs in our investment analysis , and 3 of those make us uncomfortable...