If You Had Bought Yuxing InfoTech Investment Holdings (HKG:8005) Stock Five Years Ago, You'd Be Sitting On A 91% Loss, Today

We're definitely into long term investing, but some companies are simply bad investments over any time frame. We don't wish catastrophic capital loss on anyone. Anyone who held Yuxing InfoTech Investment Holdings Limited (HKG:8005) for five years would be nursing their metaphorical wounds since the share price dropped 91% in that time. And some of the more recent buyers are probably worried, too, with the stock falling 33% in the last year. It's down 1.7% in the last seven days.

We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

See our latest analysis for Yuxing InfoTech Investment Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Yuxing InfoTech Investment Holdings became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.

Arguably, the revenue drop of 6.9% a year for half a decade suggests that the company can't grow in the long term. This has probably encouraged some shareholders to sell down the stock.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

SEHK:8005 Income Statement April 6th 2020
SEHK:8005 Income Statement April 6th 2020

If you are thinking of buying or selling Yuxing InfoTech Investment Holdings stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Yuxing InfoTech Investment Holdings shareholders are down 33% for the year. Unfortunately, that's worse than the broader market decline of 19%. 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 38% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. 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. For example, we've discovered 5 warning signs for Yuxing InfoTech Investment Holdings (1 shouldn't be ignored!) that you should be aware of before investing here.

But note: Yuxing InfoTech Investment Holdings 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 HK exchanges.

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.

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. Thank you for reading.