While not a mind-blowing move, it is good to see that the Yiren Digital Ltd. (NYSE:YRD) share price has gained 23% in the last three months. But that is meagre solace in the face of the shocking decline over three years. Indeed, the share price is down a whopping 89% in the last three years. So it sure is nice to see a bit of an improvement. The thing to think about is whether the business has really turned around.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
See our latest analysis for Yiren Digital
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 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.
During the three years that the share price fell, Yiren Digital's earnings per share (EPS) dropped by 49% each year. This fall in EPS isn't far from the rate of share price decline, which was 52% per year. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. In this case, it seems that the EPS is guiding the share price.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
A Different Perspective
Over the last year, Yiren Digital shareholders took a loss of 20%. In contrast the market gained about 24%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Unfortunately, the longer term story isn't pretty, with investment losses running at 24% per year over three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. 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. Even so, be aware that Yiren Digital is showing 2 warning signs in our investment analysis , you should know about...
We will like Yiren Digital better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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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About NYSE:YRD
Yiren Digital
Provides financial services through an AI-powered platform in China.
Flawless balance sheet and good value.
