The three-year shareholder returns and company earnings persist lower as LifeTech Scientific (HKG:1302) stock falls a further 6.3% in past week

If you love investing in stocks you're bound to buy some losers. But long term LifeTech Scientific Corporation (HKG:1302) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 62% decline in the share price in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 38% lower in that time. Furthermore, it's down 27% in about a quarter. That's not much fun for holders.

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

View our latest analysis for LifeTech Scientific

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 the three years that the share price fell, LifeTech Scientific's earnings per share (EPS) dropped by 10% each year. This reduction in EPS is slower than the 27% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

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

It might be well worthwhile taking a look at our free report on LifeTech Scientific's earnings, revenue and cash flow.

A Different Perspective

Investors in LifeTech Scientific had a tough year, with a total loss of 38%, against a market gain of about 22%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2% per year over five years. 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with LifeTech Scientific , and understanding them should be part of your investment process.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.