ADAMA (SZSE:000553 investor five-year losses grow to 57% as the stock sheds CN¥513m this past week

Statistically speaking, long term investing is a profitable endeavour. But along the way some stocks are going to perform badly. For example the ADAMA Ltd. (SZSE:000553) share price dropped 58% over five years. That's an unpleasant experience for long term holders. We also note that the stock has performed poorly over the last year, with the share price down 51%. Furthermore, it's down 29% in about a quarter. That's not much fun for holders.

With the stock having lost 4.9% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for ADAMA

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over five years ADAMA's earnings per share dropped significantly, falling to a loss, with the share price also lower. At present it's hard to make valid comparisons between EPS and the share price. However, we can say we'd expect to see a falling share price in this scenario.

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

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

A Different Perspective

We regret to report that ADAMA shareholders are down 51% for the year. Unfortunately, that's worse than the broader market decline of 19%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% 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. It's always interesting to track share price performance over the longer term. But to understand ADAMA better, we need to consider many other factors. Even so, be aware that ADAMA is showing 1 warning sign in our investment analysis , you should know about...

But note: ADAMA may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com