HF Foods Group (NASDAQ:HFFG) sheds US$70m, company earnings and investor returns have been trending downwards for past three years
As every investor would know, not every swing hits the sweet spot. But really big losses can really drag down an overall portfolio. So consider, for a moment, the misfortune of HF Foods Group Inc. (NASDAQ:HFFG) investors who have held the stock for three years as it declined a whopping 77%. That would certainly shake our confidence in the decision to own the stock. The more recent news is of little comfort, with the share price down 32% in a year. The last week also saw the share price slip down another 23%.
Since HF Foods Group has shed US$70m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Check out our latest analysis for HF Foods Group
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. 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).
HF Foods Group saw its EPS decline at a compound rate of 3.4% per year, over the last three years. The share price decline of 38% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
A Different Perspective
The last twelve months weren't great for HF Foods Group shares, which performed worse than the market, costing holders 32%. Meanwhile, the broader market slid about 8.4%, likely weighing on the stock. Unfortunately, the longer term story isn't pretty, with investment losses running at 21% per year over three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. 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 4 warning signs for HF Foods Group (1 doesn't sit too well with us!) that you should be aware of before investing here.
Of course HF Foods Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
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