China Kepei Education Group's (HKG:1890) earnings have declined over year, contributing to shareholders 39% loss

Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the China Kepei Education Group Limited (HKG:1890) share price is down 41% in the last year. That's well below the market decline of 7.3%. We wouldn't rush to judgement on China Kepei Education Group because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 23% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

On a more encouraging note the company has added CN¥584m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

View our latest analysis for China Kepei Education Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Unhappily, China Kepei Education Group had to report a 25% decline in EPS over the last year. This reduction in EPS is not as bad as the 41% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We consider it positive that insiders have made significant purchases in the last year. 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 China Kepei Education Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

We doubt China Kepei Education Group shareholders are happy with the loss of 39% over twelve months (even including dividends). That falls short of the market, which lost 7.3%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 23%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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 example, we've discovered 3 warning signs for China Kepei Education Group (1 is a bit unpleasant!) that you should be aware of before investing here.

China Kepei Education Group 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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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.