Smoore International Holdings (HKG:6969) stock falls 3.0% in past week as three-year earnings and shareholder returns continue downward trend

As an investor, mistakes are inevitable. But you have a problem if you face massive losses more than once in a while. So consider, for a moment, the misfortune of Smoore International Holdings Limited (HKG:6969) investors who have held the stock for three years as it declined a whopping 79%. That would certainly shake our confidence in the decision to own the stock. And over the last year the share price fell 52%, so we doubt many shareholders are delighted.

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

Check out our latest analysis for Smoore International Holdings

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 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).

During the three years that the share price fell, Smoore International Holdings' earnings per share (EPS) dropped by 1.7% each year. This reduction in EPS is slower than the 41% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

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. It might be well worthwhile taking a look at our free report on Smoore International Holdings' earnings, revenue and cash flow.

A Different Perspective

Smoore International Holdings shareholders are down 52% for the year (even including dividends), falling short of the market return. The market shed around 2.7%, no doubt weighing on the stock price. The three-year loss of 21% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. Case in point: We've spotted 3 warning signs for Smoore International Holdings you should be aware of, and 1 of them is potentially serious.

Smoore International 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 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.