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It's not possible to invest over long periods without making some bad investments. But really bad investments should be rare. So spare a thought for the long term shareholders of Qudian Inc. (NYSE:QD); the share price is down a whopping 75% in the last three years. That'd be enough to cause even the strongest minds some disquiet. The silver lining is that the stock is up 3.4% in about a week.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Qudian saw its EPS decline at a compound rate of 40% per year, over the last three years. This fall in EPS isn't far from the rate of share price decline, which was 37% per year. So it seems like sentiment towards the stock hasn't changed all that much over time. It seems like the share price is reflecting the declining earnings per share.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into Qudian's key metrics by checking this interactive graph of Qudian's earnings, revenue and cash flow.
A Different Perspective
While the market return was 46% in the last year, Qudian returned 43% to shareholders. Shareholders can take comfort that it's certainly better than the yearly loss of about 21% per year endured over the last three years. The optimist would say that this might be the dawn of a brighter future. 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. Case in point: We've spotted 1 warning sign for Qudian you should be aware of.
We will like Qudian better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. 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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