Recent 11% decline not enough to hurt long-term shareholders of China Rare Earth Holdings (HKG: 769), they are still up 115% over 3 years

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China Rare Earth Holdings Limited (HKG:769) Shareholders may be worried after seeing the stock price drop 18% in the last quarter. On the other hand, the three-year return is impressive. Indeed, the share price is up 115% over this period. The recent fall in the share price should therefore be seen in this context. Fundamental trading performance will ultimately dictate whether the top is in place or if this is a great buying opportunity.

Although the past week hurt the company’s three-year performance, let’s take a look at recent trends in underlying activity and see if the gains have been aligned.

Check out our latest analysis for China Rare Earth Holdings

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

China Rare Earth Holdings has become profitable over the past three years. Given the significance of this milestone, it’s not too surprising that the stock price rose sharply.

The graph below illustrates the evolution of EPS over time (reveal the exact values ​​by clicking on the image).

SEHK: 769 Earnings per share growth March 9, 2022

It’s probably worth noting that the CEO is paid less than the median at companies of a similar size. But while it’s still worth checking out CEO compensation, the really important question is whether the company can increase its profits in the future. This free The China Rare Earth Holdings Interactive Earnings, Revenue and Cash Flow Report is a great place to start if you want to do more research on the stock.

A different perspective

We regret to report that China Rare Earth Holdings shareholders are down 31% for the year. Unfortunately, this is worse than the general market decline of 20%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. On the positive side, long-term shareholders have made money, with a gain of 4% per year over half a decade. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. To this end, you should be aware of the 2 warning signs we spotted with China Rare Earth Holdings.

For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on HK exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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