Reflecting on Lifestyle China Group's (HKG:2136) Share Price Returns Over The Last Three Years

Investing in stocks inevitably means buying into some companies that perform poorly. But long term Lifestyle China Group Limited (HKG:2136) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 57% in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 54% lower in that time. The falls have accelerated recently, with the share price down 15% in the last three months.

See our latest analysis for Lifestyle China Group

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.

Lifestyle China Group saw its share price decline over the three years in which its EPS also dropped, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. However, we can say we'd expect to see a falling share price in this scenario.

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

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

A Different Perspective

The last twelve months weren't great for Lifestyle China Group shares, which cost holders 54%, while the market was up about 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 16% 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. It's always interesting to track share price performance over the longer term. But to understand Lifestyle China Group better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Lifestyle China Group you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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This article by Simply Wall St is general in nature. 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.
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