China Daye Non-Ferrous Metals Mining's (HKG:661 three-year decrease in earnings delivers investors with a 59% loss

If you love investing in stocks you're bound to buy some losers. But the long term shareholders of China Daye Non-Ferrous Metals Mining Limited (HKG:661) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 59% drop in the share price over that period. And over the last year the share price fell 28%, so we doubt many shareholders are delighted. Shareholders have had an even rougher run lately, with the share price down 35% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

After losing 11% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for China Daye Non-Ferrous Metals Mining

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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, China Daye Non-Ferrous Metals Mining's earnings per share (EPS) dropped by 80% each year. The recent extraordinary items made their mark on profits. In comparison the 26% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 208.38.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

It's probably worth noting that the CEO is paid less than the median at similar sized 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. Dive deeper into the earnings by checking this interactive graph of China Daye Non-Ferrous Metals Mining's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 3.1% in the last year, China Daye Non-Ferrous Metals Mining shareholders lost 28%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. 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 China Daye Non-Ferrous Metals Mining better, we need to consider many other factors. For instance, we've identified 2 warning signs for China Daye Non-Ferrous Metals Mining (1 is a bit unpleasant) that you should be aware of.

But note: China Daye Non-Ferrous Metals Mining may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.