The three-year loss for Jiangsu AMER New Material (SZSE:002201) shareholders likely driven by its shrinking earnings
This week we saw the Jiangsu AMER New Material Co., Ltd. (SZSE:002201) share price climb by 15%. But only the myopic could ignore the astounding decline over three years. Indeed, the share price is down a whopping 71% in the last three years. So it sure is nice to see a bit of an improvement. But the more important question is whether the underlying business can justify a higher price still.
On a more encouraging note the company has added CN¥391m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.
Check out our latest analysis for Jiangsu AMER New Material
There is no denying that markets are sometimes efficient, but prices do not always reflect 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).
During the three years that the share price fell, Jiangsu AMER New Material's earnings per share (EPS) dropped by 5.5% 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. Having said that, the market is still optimistic, given the P/E ratio of 73.68.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into Jiangsu AMER New Material's key metrics by checking this interactive graph of Jiangsu AMER New Material's earnings, revenue and cash flow.
A Different Perspective
We regret to report that Jiangsu AMER New Material shareholders are down 45% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 6.0%. 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 10% 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. Before forming an opinion on Jiangsu AMER New Material you might want to consider these 3 valuation metrics.
Of course Jiangsu AMER New Material may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
About SZSE:002201
Jiangsu AMER New Material
Jiangsu Amer New Material Co., Ltd. produces and sells glass fiber yarn, fabrics, and FRP products in China.
Flawless balance sheet with solid track record.