Investors five-year losses continue as Macrolink Culturaltainment Development (SZSE:000620) dips a further 5.3% this week, earnings continue to decline

We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example the Macrolink Culturaltainment Development Co., Ltd. (SZSE:000620) share price dropped 59% over five years. That is extremely sub-optimal, to say the least. More recently, the share price has dropped a further 26% in a month.

Since Macrolink Culturaltainment Development has shed CN¥587m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Macrolink Culturaltainment Development

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Macrolink Culturaltainment Development became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics might give us a better handle on how its value is changing over time.

Arguably, the revenue drop of 23% a year for half a decade suggests that the company can't grow in the long term. That could explain the weak share price.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on Macrolink Culturaltainment Development's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Macrolink Culturaltainment Development shareholders have received a total shareholder return of 14% over the last year. That certainly beats the loss of about 9% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. For instance, we've identified 3 warning signs for Macrolink Culturaltainment Development (1 is significant) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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