Your portfolio should ideally beat the average market. Even the best stock picker can only win with a few selections. Considering the 47% drop in the share price over the last five years, some shareholders might be questioning the investment they made in Luxin Venture Capital Group Co. Ltd.. The share price has fallen by 24% in the last year. The share price has fallen by 16% over the last 90 days, which is even worse for shareholders.

Let’s look at the fundamentals to see what we can learn.

View our latest analysis of Luxin Venture Capital Group

Investors are not always rational, despite the efficient markets hypothesis being taught by some. Comparing the earnings per share with the share price is a flawed but reasonable way of assessing how sentiment has changed around a company.

Both the share price of Luxin Venture Capital Group and its EPS have declined over the past five years. The latter has decreased at a rate 44% per annum. This decline in EPS is greater than the 12% annual compound share price drop. The market may have been expecting the business to improve, which could explain the relatively muted reaction in the share price. The high P/E of 635.95 indicates that investors believe earnings will increase in the future.

Below you can see how EPS has evolved over time.

Check out this interactive graph to learn more about Luxin Venture Capital Group. It shows earnings and revenue, as well as cash flow .

What about Dividends?

Investors should not only consider the share price return but also the total shareholder returns (TSR). The TSR includes the value of spin-offs and discounted capital raisings along with any dividends. This is based on the assumption the dividends will be reinvested. For companies that pay out a generous dividend the TSR can be much higher than the share value return. Luxin Venture Capital Group had a TSR of -43% for the past five years, which is higher than the share price return. This is largely due to its dividend payments.

A Different Perspective

We regret to inform you that Luxin Venture Capital Group shares are down by 23% this year (even after dividends). Unfortunately, this is worse than the 14% market decline. It could be that the share prices have been affected by broader market volatility. It’s worth keeping an eye out for any good opportunities. Unfortunately, the performance of last year was just the end of a bad run. Shareholders have suffered a total loss per year of 7% over a period five years. Long-term share price weakness is generally a bad sign. However, contrarian investors may want to research a stock in the hope of a turnaround. I find it fascinating to use share price as a proxy of business performance over the long-term. To gain true insight, it is important to also consider other information. Take risks for example. Luxin Venture Capital Group has four warning signs and two that are a little concerning.

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Please take note that the market returns quoted here are the average market returns of stocks currently traded on Chinese exchanges.

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This article is of a general nature. Our articles are based on historical data, analyst forecasts, and unbiased methodology. They do not provide financial advice. We strive to provide you with long-term analysis based on fundamental data. Please note that our analysis may exclude the most recent qualitative or price-sensitive announcements from companies. Simply Wall St does not hold any of the stocks mentioned.

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