Even the best stock pickers will make plenty of bad investments. And unfortunately for Lixiang Education Holding Co., Ltd. (NASDAQ:LXEH) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 55% in that time. We wouldn't rush to judgement on Lixiang Education Holding because we don't have a long term history to look at. The falls have accelerated recently, with the share price down 38% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
Given that Lixiang Education Holding only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In just one year Lixiang Education Holding saw its revenue fall by 78%. If you think that's a particularly bad result, you're statistically on the money It's no surprise, then, that investors dumped the stock like it was garbage, sending the share price down 55%. Buying shares in loss making companies with falling revenue is often called speculation, not investing. So we'll be looking for strong improvements on the numbers before getting excited.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
We doubt Lixiang Education Holding shareholders are happy with the loss of 55% over twelve months. That falls short of the market, which lost 8.4%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 38% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Lixiang Education Holding better, we need to consider many other factors. For instance, we've identified 4 warning signs for Lixiang Education Holding (1 can't be ignored) that you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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.