Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of NavInfo Co., Ltd. (SZSE:002405) have had an unfortunate run in the last three years. Unfortunately, they have held through a 57% decline in the share price in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 41% lower in that time. Shareholders have had an even rougher run lately, with the share price down 29% in the last 90 days.
With the stock having lost 5.5% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
View our latest analysis for NavInfo
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.
Over the three years that the share price declined, NavInfo's earnings per share (EPS) dropped significantly, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. However, we can say we'd expect to see a falling share price in this scenario.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into NavInfo's key metrics by checking this interactive graph of NavInfo's earnings, revenue and cash flow.
A Different Perspective
We regret to report that NavInfo shareholders are down 41% for the year. Unfortunately, that's worse than the broader market decline of 20%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
Of course NavInfo 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 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.