Investing in stocks carries the risk that the stock price will fall. Anyone who has held China East Education Holdings Limited (HKG: 667) Over the past year knows how a loser feels. The share price slipped 67% during this period. Since China East Education Holdings has not been listed on the stock exchange for many years, the market is still learning more about the company’s performance. The falls have accelerated recently, with the share price falling 32% in the past three months.
Based on last week’s investor sentiment for China East Education Holdings is not positive, so let’s see if there is a mismatch between fundamentals and the share price.
Check out our latest analysis for China East Education Holdings
To paraphrase Benjamin Graham: In the short term the market is a voting machine, but in the long term it is a weighing machine. By comparing earnings per share (EPS) and changes in stock prices over time, we can get a sense of how investors’ attitudes towards a company have changed over time.
Sadly, China East Education Holdings had to report a 68% drop in its EPS over the past year. This change in EPS is remarkably close to the 67% drop in the share price. We could therefore assume that the market was not more concerned with the company, despite the fall in EPS. On the contrary, the share price remains a similar multiple of EPS, suggesting that the outlook remains the same.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
Dive deeper into the key metrics of China East Education Holdings by viewing this interactive graph of China East Education Holdings earnings, revenue and cash flow.
A different perspective
China East Education Holdings shareholders are down 66% for the year (including dividends), even worse than the market’s loss of 0.8%. This is disappointing, but it should be borne in mind that selling on a market scale would not have helped. With the stock falling 32% in the past three months, the market doesn’t seem to believe the company has solved all of its problems. Given the relatively short history of this stock, we will remain fairly cautious until we see strong trading performance. It is always interesting to follow the evolution of stock prices over the long term. But to better understand China East Education Holdings, there are many other factors that we need to consider. For example, we discovered 3 warning signs for China East Education Holdings which you should know before investing here.
If you like to buy stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on the Hong Kong stock exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.