Statistically speaking, long term investing is a profitable endeavour. But along the way some stocks are going to perform badly. For example, after five long years the Shenzhen Goodix Technology Co., Ltd. (SHSE:603160) share price is a whole 61% lower. That's an unpleasant experience for long term holders. Unfortunately the share price momentum is still quite negative, with prices down 9.4% in thirty days.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Shenzhen Goodix Technology became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics might give us a better handle on how its value is changing over time.

We don't think that the 0.3% is big factor in the share price, since it's quite small, as dividends go. Arguably, the revenue drop of 9.5% a year for half a decade suggests that the company can't grow in the long term. This has probably encouraged some shareholders to sell down the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We know that Shenzhen Goodix Technology has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Shenzhen Goodix Technology stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

It's nice to see that Shenzhen Goodix Technology shareholders have received a total shareholder return of 11% over the last year. That's including the dividend. Notably the five-year annualised TSR loss of 10% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Shenzhen Goodix Technology better, we need to consider many other factors. Even so, be aware that Shenzhen Goodix Technology is showing 1 warning sign in our investment analysis , you should know about...

We will like Shenzhen Goodix Technology 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 Chinese 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com