Hidili Industry International Development's (HKG:1393) one-year decline in earnings translates into losses for shareholders

This week we saw the Hidili Industry International Development Limited (HKG:1393) share price climb by 10%. But that is meagre solace when you consider how the price has plummeted over the last year. Indeed, the share price is down a whopping 79% in the last year. Arguably, the recent bounce is to be expected after such a bad drop. The real question is whether the company can turn around its fortunes.

The recent uptick of 10% could be a positive sign of things to come, so let's take a look at historical fundamentals.

View our latest analysis for Hidili Industry International Development

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Unhappily, Hidili Industry International Development had to report a 94% decline in EPS over the last year. This proportional reduction in earnings per share isn't far from the 79% decrease in the share price. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price has approximately tracked EPS growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Hidili Industry International Development's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 13% in the twelve months, Hidili Industry International Development shareholders did even worse, losing 79%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% 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 Hidili Industry International Development better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 6 warning signs for Hidili Industry International Development (of which 2 are significant!) 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 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.