U.S. Markets closed

Introducing Xinte Energy (HKG:1799), The Stock That Dropped 39% In The Last Year

Simply Wall St

The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Xinte Energy Co., Ltd. (HKG:1799) have tasted that bitter downside in the last year, as the share price dropped 39%. That falls noticeably short of the market return of around 9.9%. At least the damage isn't so bad if you look at the last three years, since the stock is down 28% in that time. There was little comfort for shareholders in the last week as the price declined a further 2.9%.

Check out our latest analysis for Xinte Energy

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.

Unfortunately Xinte Energy reported an EPS drop of 61% for the last year. This fall in the EPS is significantly worse than the 39% the share price fall. It may have been that the weak EPS was not as bad as some had feared.

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

SEHK:1799 Past and Future Earnings, January 21st 2020

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Xinte Energy's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered Xinte Energy's share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for Xinte Energy shareholders, and that cash payout explains why its total shareholder loss of 38%, over the last year, isn't as bad as the share price return.

A Different Perspective

Xinte Energy shareholders are down 38% for the year (even including dividends) , but the broader market is up 9.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 8.0% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Xinte Energy better, we need to consider many other factors. For example, we've discovered 4 warning signs for Xinte Energy (1 is a bit concerning!) that you should be aware of before investing here.

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.

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.

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. Thank you for reading.