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Easy Come, Easy Go: How BII Railway Transportation Technology Holdings (HKG:1522) Shareholders Got Unlucky And Saw 77% Of Their Cash Evaporate - Yahoo Finance

We're definitely into long term investing, but some companies are simply bad investments over any time frame. It hits us in the gut when we see fellow investors suffer a loss. For example, we sympathize with anyone who was caught holding BII Railway Transportation Technology Holdings Company Limited (HKG:1522) during the five years that saw its share price drop a whopping 77%. Unhappily, the share price slid 3.8% in the last week.

See our latest analysis for BII Railway Transportation Technology Holdings

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the five years over which the share price declined, BII Railway Transportation Technology Holdings's earnings per share (EPS) dropped by 1.9% each year. Readers should note that the share price has fallen faster than the EPS, at a rate of 25% per year, over the period. This implies that the market was previously too optimistic about the stock.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

SEHK:1522 Past and Future Earnings, January 31st 2020

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on BII Railway Transportation Technology Holdings's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 4.1% in the twelve months, BII Railway Transportation Technology Holdings shareholders did even worse, losing 14% (even including dividends) . Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, longer term shareholders are suffering worse, given the loss of 25% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of BII Railway Transportation Technology Holdings by clicking this link.

BII Railway Transportation Technology Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.

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Easy Come, Easy Go: How BII Railway Transportation Technology Holdings (HKG:1522) Shareholders Got Unlucky And Saw 77% Of Their Cash Evaporate - Yahoo Finance
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