Investors three-year losses continue as Beijing Yuanliu Hongyuan Electronic Technology (SHSE:603267) dips a further 4.6% this week, earnings continue to decline

It's not possible to invest over long periods without making some bad investments. But you have a problem if you face massive losses more than once in a while. So take a moment to sympathize with the long term shareholders of Beijing Yuanliu Hongyuan Electronic Technology Co., Ltd. (SHSE:603267), who have seen the share price tank a massive 74% over a three year period. That'd be enough to cause even the strongest minds some disquiet. And the ride hasn't got any smoother in recent times over the last year, with the price 45% lower in that time.

If the past week is anything to go by, investor sentiment for Beijing Yuanliu Hongyuan Electronic Technology isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Beijing Yuanliu Hongyuan Electronic 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. 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 Yuanliu Hongyuan Electronic Technology saw its EPS decline at a compound rate of 27% per year, over the last three years. The share price decline of 36% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

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

Dive deeper into Beijing Yuanliu Hongyuan Electronic Technology's key metrics by checking this interactive graph of Beijing Yuanliu Hongyuan Electronic Technology's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Beijing Yuanliu Hongyuan Electronic Technology shareholders are down 44% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 10%. 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. Longer term investors wouldn't be so upset, since they would have made 2%, 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. 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 2 warning signs for Beijing Yuanliu Hongyuan Electronic Technology that you should be aware of.

We will like Beijing Yuanliu Hongyuan Electronic Technology better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.