The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Royal Deluxe Holdings Limited (HKG:3789) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 69% drop in the share price over that period. And more recent buyers are having a tough time too, with a drop of 57% in the last year. Furthermore, it's down 17% in about a quarter. That's not much fun for holders. But this could be related to the weak market, which is down 13% in the same period.

View our latest analysis for Royal Deluxe Holdings

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.

Royal Deluxe Holdings saw its EPS decline at a compound rate of 15% per year, over the last three years. The share price decline of 32% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 3.12.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

The last twelve months weren't great for Royal Deluxe Holdings shares, which performed worse than the market, costing holders 57%. The market shed around 16%, no doubt weighing on the stock price. Shareholders have lost 32% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Royal Deluxe Holdings better, we need to consider many other factors. Even so, be aware that Royal Deluxe Holdings is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...

But note: Royal Deluxe Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).