Investors five-year losses continue as Baidu (NASDAQ:BIDU) dips a further 3.5% this week, earnings continue to decline

Statistically speaking, long term investing is a profitable endeavour. But unfortunately, some companies simply don't succeed. To wit, the Baidu, Inc. (NASDAQ:BIDU) share price managed to fall 52% over five long years. That is extremely sub-optimal, to say the least. Even worse, it's down 20% in about a month, which isn't fun at all.

After losing 3.5% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Baidu

There is no denying that markets are sometimes efficient, but prices do not always reflect 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 five years over which the share price declined, Baidu's earnings per share (EPS) dropped by 18% each year. The share price decline of 14% per year isn't as bad as the EPS decline. The relatively muted share price reaction might be because the market expects the business to turn around.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It is of course excellent to see how Baidu has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Baidu's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 0.02% in the twelve months, Baidu shareholders did even worse, losing 2.9%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, longer term shareholders are suffering worse, given the loss of 9% doled out over the last five 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Baidu , and understanding them should be part of your investment process.

But note: Baidu may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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