Stock Analysis

Investors three-year losses continue as Jiang Su Yida ChemicalLtd (SZSE:300721) dips a further 12% this week, earnings continue to decline

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SZSE:300721

While not a mind-blowing move, it is good to see that the Jiang Su Yida Chemical Co.,Ltd (SZSE:300721) share price has gained 26% in the last three months. Meanwhile over the last three years the stock has dropped hard. Tragically, the share price declined 56% in that time. So the improvement may be a real relief to some. After all, could be that the fall was overdone.

With the stock having lost 12% 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 Jiang Su Yida ChemicalLtd

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 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.

Jiang Su Yida ChemicalLtd became profitable within the last five years. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.

The modest 0.7% dividend yield is unlikely to be guiding the market view of the stock. Revenue is actually up 9.5% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Jiang Su Yida ChemicalLtd further; while we may be missing something on this analysis, there might also be an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

SZSE:300721 Earnings and Revenue Growth November 18th 2024

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Jiang Su Yida ChemicalLtd's earnings, revenue and cash flow.

A Different Perspective

Investors in Jiang Su Yida ChemicalLtd had a tough year, with a total loss of 19% (including dividends), against a market gain of about 6.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 8%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Jiang Su Yida ChemicalLtd has 2 warning signs (and 1 which can't be ignored) we think you should know about.

But note: Jiang Su Yida ChemicalLtd 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.