Every investor on earth makes bad calls sometimes. But you have a problem if you face massive losses more than once in a while. So consider, for a moment, the misfortune of Xinyi Solar Holdings Limited (HKG:968) investors who have held the stock for three years as it declined a whopping 77%. That'd be enough to cause even the strongest minds some disquiet. And more recent buyers are having a tough time too, with a drop of 47% in the last year. On top of that, the share price is down 6.0% in the last week.

After losing 6.0% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Xinyi Solar Holdings

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.

Xinyi Solar Holdings saw its EPS decline at a compound rate of 42% per year, over the last three years. This fall in EPS isn't far from the rate of share price decline, which was 38% per year. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. Rather, the share price has approximately tracked EPS growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

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. Dive deeper into the earnings by checking this interactive graph of Xinyi Solar Holdings' earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Xinyi Solar Holdings' total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Xinyi Solar Holdings' TSR, which was a 74% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

Investors in Xinyi Solar Holdings had a tough year, with a total loss of 44%, against a market gain of about 36%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Xinyi Solar Holdings better, we need to consider many other factors. Even so, be aware that Xinyi Solar Holdings is showing 1 warning sign in our investment analysis , you should know about...

We will like Xinyi Solar Holdings better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 Hong Kong exchanges.

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