The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it should be a priority to avoid stomach churning catastrophes, wherever possible. It must have been painful to be a Longhui International Holdings Limited (HKG:1007) shareholder over the last year, since the stock price plummeted 89% in that time. That'd be enough to make even the strongest stomachs churn. We wouldn't rush to judgement on Longhui International Holdings because we don't have a long term history to look at.

We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

View our latest analysis for Longhui International Holdings

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Longhui International Holdings fell to a loss making position during the year. Buyers no doubt think it's a temporary situation, but those with a nose for quality have low tolerance for losses. We hope for shareholders' sake that the company becomes profitable again soon.

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

Dive deeper into Longhui International Holdings's key metrics by checking this interactive graph of Longhui International Holdings's earnings, revenue and cash flow.

A Different Perspective

Longhui International Holdings shareholders are down 89% for the year, even worse than the market loss of 20%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 27% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Longhui International Holdings better, we need to consider many other factors. Take risks, for example - Longhui International Holdings has 7 warning signs (and 3 which shouldn't be ignored) we think you should know about.