Investors five-year losses continue as China Nuclear Energy Technology (HKG:611) dips a further 10% this week, earnings continue to decline

Generally speaking long term investing is the way to go. But no-one is immune from buying too high. For example, after five long years the China Nuclear Energy Technology Corporation Limited (HKG:611) share price is a whole 59% lower. We certainly feel for shareholders who bought near the top. The falls have accelerated recently, with the share price down 15% in the last three months. Of course, this share price action may well have been influenced by the 11% decline in the broader market, throughout the period.

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

However if you'd rather see where the opportunities and risks are within 611's industry, you can check out our analysis on the HK Construction industry.

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, China Nuclear Energy Technology's earnings per share (EPS) dropped by 11% each year. This reduction in EPS is less than the 16% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

We're pleased to report that China Nuclear Energy Technology shareholders have received a total shareholder return of 5.1% over one year. There's no doubt those recent returns are much better than the TSR loss of 10% per year over five years. 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. It's always interesting to track share price performance over the longer term. But to understand China Nuclear Energy Technology better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for China Nuclear Energy Technology (of which 2 are a bit concerning!) you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK 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.