Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. For example the Ozner Water International Holding Limited (HKG:2014) share price dropped 63% over five years. That is extremely sub-optimal, to say the least. And we doubt long term believers are the only worried holders, since the stock price has declined 41% over the last twelve months. Shareholders have had an even rougher run lately, with the share price down 14% in the last 90 days. However, one could argue that the price has been influenced by the general market, which is down 5.9% in the same timeframe.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.
Looking back five years, both Ozner Water International Holding's share price and EPS declined; the latter at a rate of 15% per year. This change in EPS is reasonably close to the 18% average annual decrease in the share price. This implies that the market has had a fairly steady view of the stock. Rather, the share price change has reflected changes in earnings per share.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Ozner Water International Holding has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Ozner Water International Holding's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
While the broader market lost about 6.2% in the twelve months, Ozner Water International Holding shareholders did even worse, losing 41% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 18% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. If you would like to research Ozner Water International Holding in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
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 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 email@example.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.