Eternity Technology Holdings Limited (HKG:1725) shareholders should be happy to see the share price up 25% in the last quarter. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 10% in a year, falling short of the returns you could get by investing in an index fund.
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. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Unfortunately Eternity Technology Holdings reported an EPS drop of 43% for the last year. This fall in the EPS is significantly worse than the 10% the share price fall. It may have been that the weak EPS was not as bad as some had feared.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
Given that the market gained 0.9% in the last year, Eternity Technology Holdings shareholders might be miffed that they lost 10%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. Putting aside the last twelve months, it’s good to see the share price has rebounded by 25%, in the last ninety days. Let’s just hope this isn’t the widely-feared ‘dead cat bounce’ (which would indicate further declines to come). Before forming an opinion on Eternity Technology Holdings you might want to consider these 3 valuation metrics.
We will like Eternity Technology Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies 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 HK exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.