Investors five-year losses continue as Yuxing InfoTech Investment Holdings (HKG:8005) dips a further 20% this week, earnings continue to decline

By
Simply Wall St
Published
March 16, 2022
SEHK:8005
Source: Shutterstock

We're definitely into long term investing, but some companies are simply bad investments over any time frame. It hits us in the gut when we see fellow investors suffer a loss. Anyone who held Yuxing InfoTech Investment Holdings Limited (HKG:8005) for five years would be nursing their metaphorical wounds since the share price dropped 85% in that time. And it's not just long term holders hurting, because the stock is down 52% in the last year. Shareholders have had an even rougher run lately, with the share price down 43% in the last 90 days. But this could be related to the weak market, which is down 19% in the same period. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

If the past week is anything to go by, investor sentiment for Yuxing InfoTech Investment Holdings isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Yuxing InfoTech Investment Holdings

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.

Yuxing InfoTech Investment Holdings became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.

Arguably, the revenue drop of 23% a year for half a decade suggests that the company can't grow in the long term. This has probably encouraged some shareholders to sell down the stock.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
SEHK:8005 Earnings and Revenue Growth March 16th 2022

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Yuxing InfoTech Investment Holdings' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 31% in the twelve months, Yuxing InfoTech Investment Holdings shareholders did even worse, losing 52%. 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 13% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Yuxing InfoTech Investment Holdings better, we need to consider many other factors. Take risks, for example - Yuxing InfoTech Investment Holdings has 3 warning signs we think you should be aware of.

Yuxing InfoTech Investment Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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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