Beijing Beida Jade Bird Universal Sci-Tech (HKG:8095) sheds CN¥151m, company earnings and investor returns have been trending downwards for past five years

Some stocks are best avoided. We don't wish catastrophic capital loss on anyone. Imagine if you held Beijing Beida Jade Bird Universal Sci-Tech Company Limited (HKG:8095) for half a decade as the share price tanked 74%. And it's not just long term holders hurting, because the stock is down 21% in the last year. More recently, the share price has dropped a further 23% in a month. However, we note the price may have been impacted by the broader market, which is down 18% in the same time period.

Since Beijing Beida Jade Bird Universal Sci-Tech has shed CN¥151m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Check out our latest analysis for Beijing Beida Jade Bird Universal Sci-Tech

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

During five years of share price growth, Beijing Beida Jade Bird Universal Sci-Tech moved from a loss to profitability. 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.

It could be that the revenue decline of 39% per year is viewed as evidence that Beijing Beida Jade Bird Universal Sci-Tech is shrinking. This has probably encouraged some shareholders to sell down the stock.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

Although it hurts that Beijing Beida Jade Bird Universal Sci-Tech returned a loss of 21% in the last twelve months, the broader market was actually worse, returning a loss of 26%. Of far more concern is the 12% p.a. loss served to shareholders over the last five years. While the losses are slowing we doubt many shareholders are happy with the stock. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 6 warning signs for Beijing Beida Jade Bird Universal Sci-Tech (of which 1 doesn't sit too well with us!) 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.