Doushen (Beijing) Education & Technology (SZSE:300010 shareholders incur further losses as stock declines 6.9% this week, taking five-year losses to 73%

Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Imagine if you held Doushen (Beijing) Education & Technology INC. (SZSE:300010) for half a decade as the share price tanked 73%. Even worse, it's down 14% in about a month, which isn't fun at all. We do note, however, that the broader market is down 6.9% in that period, and this may have weighed on the share price.

With the stock having lost 6.9% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Doushen (Beijing) Education & Technology

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, Doushen (Beijing) Education & Technology moved from a loss to profitability. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.

Arguably, the revenue drop of 18% 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 image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Take a more thorough look at Doushen (Beijing) Education & Technology's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Doushen (Beijing) Education & Technology shareholders have received a total shareholder return of 5.9% over the last year. Notably the five-year annualised TSR loss of 12% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Case in point: We've spotted 2 warning signs for Doushen (Beijing) Education & Technology you should be aware of, and 1 of them shouldn't be ignored.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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