We're definitely into long term investing, but some companies are simply bad investments over any time frame. We don't wish catastrophic capital loss on anyone. Anyone who held FIT Hon Teng Limited (HKG:6088) for five years would be nursing their metaphorical wounds since the share price dropped 74% in that time. And some of the more recent buyers are probably worried, too, with the stock falling 59% in the last year. More recently, the share price has dropped a further 21% in a month.

Since FIT Hon Teng has shed HK$709m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for FIT Hon Teng

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.

During the five years over which the share price declined, FIT Hon Teng's earnings per share (EPS) dropped by 20% each year. This change in EPS is reasonably close to the 24% average annual decrease in the share price. This suggests that market participants have not changed their view of the company all that much. Rather, the share price has approximately tracked EPS growth.

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

Dive deeper into FIT Hon Teng's key metrics by checking this interactive graph of FIT Hon Teng's earnings, revenue and cash flow.

A Different Perspective

We regret to report that FIT Hon Teng shareholders are down 59% for the year. Unfortunately, that's worse than the broader market decline of 18%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 12% per year over five years. 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 FIT Hon Teng better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for FIT Hon Teng you should know about.

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 Hong Kong 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.