Did You Manage To Avoid Jiangsu Innovative Ecological New Materials's (HKG:2116) 39% Share Price Drop?
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It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the Jiangsu Innovative Ecological New Materials Limited (HKG:2116) share price slid 39% over twelve months. That contrasts poorly with the market return of -9.8%. Jiangsu Innovative Ecological New Materials may have better days ahead, of course; we've only looked at a one year period. The falls have accelerated recently, with the share price down 16% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 8.6% in the same timeframe.
Check out our latest analysis for Jiangsu Innovative Ecological New Materials
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. 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.
Unhappily, Jiangsu Innovative Ecological New Materials had to report a 33% decline in EPS over the last year. We note that the 39% share price drop is very close to the EPS drop. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price has approximately tracked EPS growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Jiangsu Innovative Ecological New Materials's earnings, revenue and cash flow.
A Different Perspective
Jiangsu Innovative Ecological New Materials shareholders are down 37% for the year (even including dividends), even worse than the market loss of 9.8%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 16% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Before deciding if you like the current share price, check how Jiangsu Innovative Ecological New Materials scores on these 3 valuation metrics.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
