AsiaInfo Technologies (HKG:1675) stock falls 6.0% in past week as one-year earnings and shareholder returns continue downward trend

It's easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the AsiaInfo Technologies Limited (HKG:1675) share price is down 46% in the last year. That's disappointing when you consider the market returned 8.8%. We note that it has not been easy for shareholders over three years, either; the share price is down 46% in that time. The falls have accelerated recently, with the share price down 12% in the last three months.

Since AsiaInfo Technologies has shed HK$421m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for AsiaInfo Technologies

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

Unhappily, AsiaInfo Technologies had to report a 37% decline in EPS over the last year. This reduction in EPS is not as bad as the 46% share price fall. So it seems the market was too confident about the business, a year ago. The P/E ratio of 11.45 also points to the negative market sentiment.

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

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

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of AsiaInfo Technologies, it has a TSR of -41% for the last 1 year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While the broader market gained around 8.8% in the last year, AsiaInfo Technologies shareholders lost 41% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 1.7%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand AsiaInfo Technologies better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with AsiaInfo Technologies , and understanding them should be part of your investment process.

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 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.