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Imagine Owning Hexindai And Trying To Stomach The 74% Share Price Drop

Simply Wall St

It is a pleasure to report that the Hexindai Inc. (NASDAQ:HX) is up 67% in the last quarter. But that hardly compensates for the shocking decline over the last twelve months. To wit, the stock has dropped 74% over the last year. Arguably, the recent bounce is to be expected after such a bad drop. The bigger issue is whether the company can sustain the momentum in the long term.

See our latest analysis for Hexindai

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unhappily, Hexindai had to report a 66% decline in EPS over the last year. This proportional reduction in earnings per share isn’t far from the 74% decrease in the share price. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price has approximately tracked EPS growth.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NasdaqGM:HX Past and Future Earnings, March 7th 2019

We know that Hexindai has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Hexindai stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While Hexindai shareholders are down 72% for the year (even including dividends), the market itself is up 2.6%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. It’s great to see a nice little 67% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it’s the start of a new trend. Before forming an opinion on Hexindai you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.

But note: Hexindai may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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 editorial-team@simplywallst.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.