Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. To wit, the PW Medtech Group Limited (HKG:1358) share price managed to fall 55% over five long years. We certainly feel for shareholders who bought near the top. It's up 3.9% in the last seven days.

See our latest analysis for PW Medtech Group

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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).

While the share price declined over five years, PW Medtech Group actually managed to increase EPS by an average of 3.0% per year. So it doesn't seem like EPS is a great guide to understanding how the market is valuing the stock. Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS.

By glancing at these numbers, we'd posit that the the market had expectations of much higher growth, five years ago. Looking to other metrics might better explain the share price change.

Arguably, the revenue drop of 19% a year for half a decade suggests that the company can't grow in the long term. This has probably encouraged some shareholders to sell down the stock.

The graphic below depicts how earnings and revenue have 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. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on PW Medtech Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that PW Medtech Group shareholders have received a total shareholder return of 10.0% over the last year. Notably the five-year annualised TSR loss of 15% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand PW Medtech Group better, we need to consider many other factors. For example, we've discovered 1 warning sign for PW Medtech Group that you should be aware of before investing here.