The three-year shareholder returns and company earnings persist lower as Ausnutria Dairy (HKG:1717) stock falls a further 10% in past week

As an investor, mistakes are inevitable. But really big losses can really drag down an overall portfolio. So consider, for a moment, the misfortune of Ausnutria Dairy Corporation Ltd (HKG:1717) investors who have held the stock for three years as it declined a whopping 76%. That'd be enough to cause even the strongest minds some disquiet. And the ride hasn't got any smoother in recent times over the last year, with the price 32% lower in that time. The falls have accelerated recently, with the share price down 16% in the last three months.

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

View our latest analysis for Ausnutria Dairy

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 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.

Ausnutria Dairy saw its EPS decline at a compound rate of 44% per year, over the last three years. This fall in EPS isn't far from the rate of share price decline, which was 38% per year. So it seems like sentiment towards the stock hasn't changed all that much over time. Rather, the share price has approximately tracked EPS growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Ausnutria Dairy's key metrics by checking this interactive graph of Ausnutria Dairy's earnings, revenue and cash flow.

A Different Perspective

Investors in Ausnutria Dairy had a tough year, with a total loss of 31% (including dividends), against a market gain of about 4.6%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Ausnutria Dairy better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Ausnutria Dairy (of which 1 doesn't sit too well with us!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.