Investors three-year losses continue as WuXi Biologics (Cayman) (HKG:2269) dips a further 6.4% this week, earnings continue to decline

It is doubtless a positive to see that the WuXi Biologics (Cayman) Inc. (HKG:2269) share price has gained some 43% in the last three months. But the last three years have seen a terrible decline. To wit, the share price sky-dived 84% in that time. Arguably, the recent bounce is to be expected after such a bad drop. Only time will tell if the company can sustain the turnaround. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

With the stock having lost 6.4% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for WuXi Biologics (Cayman)

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

WuXi Biologics (Cayman) saw its EPS decline at a compound rate of 2.1% per year, over the last three years. This reduction in EPS is slower than the 46% 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. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on WuXi Biologics (Cayman)'s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

WuXi Biologics (Cayman) shareholders are down 66% for the year, but the market itself is up 21%. 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 8% 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. 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 1 warning sign for WuXi Biologics (Cayman) you should be aware of.

WuXi Biologics (Cayman) is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been 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.