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Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So spare a thought for the long term shareholders of LexinFintech Holdings Ltd. (NASDAQ:LX); the share price is down a whopping 84% in the last twelve months. A loss like this is a stark reminder that portfolio diversification is important. We note that it has not been easy for shareholders over three years, either; the share price is down 82% in that time. Furthermore, it's down 32% in about a quarter. That's not much fun for holders. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Unfortunately LexinFintech Holdings reported an EPS drop of 15% for the last year. This reduction in EPS is not as bad as the 84% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business. The P/E ratio of 1.48 also points to the negative market sentiment.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into LexinFintech Holdings' key metrics by checking this interactive graph of LexinFintech Holdings's earnings, revenue and cash flow.
A Different Perspective
LexinFintech Holdings shareholders are down 84% for the year, falling short of the market return. Meanwhile, the broader market slid about 10%, likely weighing on the stock. The three-year loss of 22% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand LexinFintech Holdings better, we need to consider many other factors. Even so, be aware that LexinFintech Holdings is showing 2 warning signs in our investment analysis , you should know about...
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.