Investors Who Bought Guangdong Kanghua Healthcare (HKG:3689) Shares Three Years Ago Are Now Down 71%

Guangdong Kanghua Healthcare Co., Ltd. (HKG:3689) shareholders should be happy to see the share price up 13% in the last week. But over the last three years we've seen a quite serious decline. In that time, the share price dropped 71%. So the improvement may be a real relief to some. Perhaps the company has turned over a new leaf.

See our latest analysis for Guangdong Kanghua Healthcare

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).

During the three years that the share price fell, Guangdong Kanghua Healthcare's earnings per share (EPS) dropped by 26% each year. This reduction in EPS is slower than the 34% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Guangdong Kanghua Healthcare's key metrics by checking this interactive graph of Guangdong Kanghua Healthcare's earnings, revenue and cash flow.

A Different Perspective

Guangdong Kanghua Healthcare shareholders are down 38% for the year, falling short of the market return. The market shed around 4.1%, no doubt weighing on the stock price. Shareholders have lost 33% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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. Case in point: We've spotted 3 warning signs for Guangdong Kanghua Healthcare you should be aware of, and 1 of them is significant.

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 HK exchanges.

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This article by Simply Wall St is general in nature. 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. Thank you for reading.