The three-year loss for LONGi Green Energy Technology (SHSE:601012) shareholders likely driven by its shrinking earnings

Every investor on earth makes bad calls sometimes. But you have a problem if you face massive losses more than once in a while. So consider, for a moment, the misfortune of LONGi Green Energy Technology Co., Ltd. (SHSE:601012) investors who have held the stock for three years as it declined a whopping 78%. That'd be enough to cause even the strongest minds some disquiet. And more recent buyers are having a tough time too, with a drop of 52% in the last year. The falls have accelerated recently, with the share price down 24% in the last three months.

While the stock has risen 6.9% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for LONGi Green Energy Technology

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 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, LONGi Green Energy Technology's earnings per share (EPS) dropped by 20% each year. The share price decline of 40% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It might be well worthwhile taking a look at our free report on LONGi Green Energy Technology's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 17% in the twelve months, LONGi Green Energy Technology shareholders did even worse, losing 52% (even including dividends). 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. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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 - LONGi Green Energy Technology has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

But note: LONGi Green Energy Technology 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