What Type Of Returns Would Yiren Digital's(NYSE:YRD) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?

It is doubtless a positive to see that the Yiren Digital Ltd. (NYSE:YRD) share price has gained some 54% in the last three months. But the last three years have seen a terrible decline. In that time the share price has melted like a snowball in the desert, down 88%. So it sure is nice to see a bit of an improvement. Of course the real question is whether the business can sustain a turnaround.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

View our latest analysis for Yiren Digital

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the three years that the share price fell, Yiren Digital's earnings per share (EPS) dropped by 49% each year. The 50% average annual share price decline is remarkably close to the EPS decline. So it seems like sentiment towards the stock hasn't changed all that much over time. In this case, it seems that the EPS is guiding the share price.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

This free interactive report on Yiren Digital's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Yiren Digital shareholders gained a total return of 72% during the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 7% endured over half a decade. So this might be a sign the business has turned its fortunes around. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Yiren Digital , and understanding them should be part of your investment process.

If you are like me, then you will not want to miss this free list of growing companies that insiders are 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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