The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Rising Nonferrous Metals Share Co.,Ltd. (SHSE:600259) shareholders over the last year, as the share price declined 21%. That's well below the market decline of 14%. However, the longer term returns haven't been so bad, with the stock down 15% in the last three years. But it's up 5.8% in the last week. Less than a week ago Rising Nonferrous Metals ShareLtd announced its financial results; you can catch up on the most recent data by reading our company report.

On a more encouraging note the company has added CN¥582m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

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).

Unfortunately Rising Nonferrous Metals ShareLtd reported an EPS drop of 14% for the last year. This reduction in EPS is not as bad as the 21% share price fall. So it seems the market was too confident about the business, a year ago. Of course, with a P/E ratio of 51.99, the market remains optimistic.

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

It is of course excellent to see how Rising Nonferrous Metals ShareLtd has grown profits over the years, but the future is more important for shareholders. This free interactive report on Rising Nonferrous Metals ShareLtd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 14% in the twelve months, Rising Nonferrous Metals ShareLtd shareholders did even worse, losing 21%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Rising Nonferrous Metals ShareLtd you should know about.

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.