Investors who have held Sino Wealth Electronic (SZSE:300327) over the last year have watched its earnings decline along with their investment

Investing in stocks comes with the risk that the share price will fall. Anyone who held Sino Wealth Electronic Ltd. (SZSE:300327) over the last year knows what a loser feels like. To wit the share price is down 51% in that time. We note that it has not been easy for shareholders over three years, either; the share price is down 48% in that time. The falls have accelerated recently, with the share price down 24% in the last three months.

On a more encouraging note the company has added CN¥366m to its market cap in just the last 7 days, so let’s see if we can determine what’s driven the one-year loss for shareholders.

View our latest analysis for Sino Wealth Electronic

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Unfortunately Sino Wealth Electronic reported an EPS drop of 73% for the last year. The share price fall of 51% isn’t as bad as the reduction in earnings per share. It may have been that the weak EPS was not as bad as some had feared. Indeed, with a P/E ratio of 58.44 there is obviously some real optimism that earnings will bounce back.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
SZSE:300327 Earnings Per Share Growth March 1st 2024

It might be well worthwhile taking a look at our free report on Sino Wealth Electronic’s earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 19% in the twelve months, Sino Wealth Electronic shareholders did even worse, losing 50% (even including dividends). 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 4% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we’ve discovered 3 warning signs for Sino Wealth Electronic (2 are potentially serious!) that you should be aware of before investing here.

But note: Sino Wealth Electronic 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 Chinese exchanges.

Valuation is complex, but we’re helping make it simple.

Find out whether Sino Wealth Electronic is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.

By yowuj