Statistically speaking, long term investing is a profitable endeavour. But that doesn't mean long term investors can avoid big losses. Zooming in on an example, the Vitasoy International Holdings Limited (HKG:345) share price dropped 67% in the last half decade. We certainly feel for shareholders who bought near the top. Furthermore, it's down 21% in about a quarter. That's not much fun for holders.
The recent uptick of 5.5% could be a positive sign of things to come, so let's take a look at historical fundamentals.
See our latest analysis for Vitasoy International Holdings
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During five years of share price growth, Vitasoy International Holdings moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.
We don't think that the 1.1% is big factor in the share price, since it's quite small, as dividends go. It could be that the revenue decline of 4.5% per year is viewed as evidence that Vitasoy International Holdings is shrinking. That could explain the weak share price.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Vitasoy International Holdings has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Vitasoy International Holdings' financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that Vitasoy International Holdings shareholders have received a total shareholder return of 41% over the last year. Of course, that includes the dividend. There's no doubt those recent returns are much better than the TSR loss of 11% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Is Vitasoy International Holdings cheap compared to other companies? These 3 valuation measures might help you decide.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong 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.