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Wencan Group (SHSE:603348) Shareholders Have Lost 51% Over 1 Year, Earnings Decline Likely the Culprit

Simply Wall St ·  Jan 28 19:22

Taking the occasional loss comes part and parcel with investing on the stock market. And there's no doubt that Wencan Group Co., Ltd. (SHSE:603348) stock has had a really bad year. In that relatively short period, the share price has plunged 51%. On the bright side, the stock is actually up 9.4% in the last three years. Furthermore, it's down 34% in about a quarter. That's not much fun for holders.

With the stock having lost 5.3% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Wencan Group

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Unfortunately Wencan Group reported an EPS drop of 90% for the last year. This fall in the EPS is significantly worse than the 51% the share price fall. It may have been that the weak EPS was not as bad as some had feared. Indeed, with a P/E ratio of 259.61 there is obviously some real optimism that earnings will bounce back.

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

earnings-per-share-growth
SHSE:603348 Earnings Per Share Growth January 29th 2024

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

A Different Perspective

We regret to report that Wencan Group shareholders are down 51% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 18%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 7% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Case in point: We've spotted 4 warning signs for Wencan Group you should be aware of, and 1 of them doesn't sit too well with us.

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 Chinese 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.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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