Investors five-year losses continue as BAIC Motor (HKG:1958) dips a further 5.1% this week, earnings continue to decline

Ideally, your overall portfolio should beat the market average. But every investor is virtually certain to have both over-performing and under-performing stocks. So we wouldn't blame long term BAIC Motor Corporation Limited (HKG:1958) shareholders for doubting their decision to hold, with the stock down 54% over a half decade. The last week also saw the share price slip down another 5.1%.

With the stock having lost 5.1% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for BAIC Motor

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During the five years over which the share price declined, BAIC Motor's earnings per share (EPS) dropped by 8.9% each year. Readers should note that the share price has fallen faster than the EPS, at a rate of 14% per year, over the period. This implies that the market was previously too optimistic about the stock. The low P/E ratio of 6.35 further reflects this reticence.

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

Dive deeper into BAIC Motor's key metrics by checking this interactive graph of BAIC Motor's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of BAIC Motor, it has a TSR of -38% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that BAIC Motor shareholders have received a total shareholder return of 20% over the last year. Of course, that includes the dividend. That certainly beats the loss of about 7% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand BAIC Motor better, we need to consider many other factors. For example, we've discovered 2 warning signs for BAIC Motor that you should be aware of before investing here.

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 Hong Kong 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.