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Hexindai Inc. (NASDAQ:HX) shareholders should be happy to see the share price up 10% in the last month. But that doesn’t change the fact that the returns over the last year have been stomach churning. Specifically, the stock price nose-dived 74% in that time. It’s not uncommon to see a bounce after a drop like that. The real question is whether the company can turn around its fortunes.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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, Hexindai had to report a 92% decline in EPS over the last year. This fall in the EPS is significantly worse than the 74% the share price fall. It may have been that the weak EPS was not as bad as some had feared.
Dive deeper into Hexindai’s key metrics by checking this interactive graph of Hexindai’s earnings, revenue and cash flow.
A Different Perspective
Given that the market gained 8.5% in the last year, Hexindai shareholders might be miffed that they lost 73% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 30% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Before forming an opinion on Hexindai you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.
Of course Hexindai may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.