Optimism around Beijing Si-Tech Information Technology (SZSE:300608) delivering new earnings growth may be shrinking as stock declines 10% this past week

For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Beijing Si-Tech Information Technology Co., Ltd. (SZSE:300608) shareholders have had that experience, with the share price dropping 29% in three years, versus a market decline of about 22%. In the last ninety days we've seen the share price slide 31%.

After losing 10% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Beijing Si-Tech Information Technology

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Beijing Si-Tech Information Technology saw its EPS decline at a compound rate of 38% per year, over the last three years. In comparison the 11% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 133.50.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Beijing Si-Tech Information Technology's key metrics by checking this interactive graph of Beijing Si-Tech Information Technology's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 10% in the twelve months, Beijing Si-Tech Information Technology shareholders did even worse, losing 16% (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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Beijing Si-Tech Information Technology better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Beijing Si-Tech Information Technology you should be aware of, and 1 of them is a bit concerning.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.