Suofeiya Home Collection (SZSE:002572) stock falls 6.2% in past week as three-year earnings and shareholder returns continue downward trend

No-one enjoys it when they lose money on a stock. But it's hard to avoid some disappointing investments when the overall market is down. While the Suofeiya Home Collection Co., Ltd. (SZSE:002572) share price is down 28% in the last three years, the total return to shareholders (which includes dividends) was -19%. And that total return actually beats the market decline of 23%.

Since Suofeiya Home Collection has shed CN¥1.1b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Suofeiya Home Collection

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During the three years that the share price fell, Suofeiya Home Collection's earnings per share (EPS) dropped by 1.5% each year. The share price decline of 10% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Suofeiya Home Collection has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Suofeiya Home Collection's TSR for the last 3 years was -19%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Suofeiya Home Collection shareholders have received a total shareholder return of 1.4% over one year. Of course, that includes the dividend. However, the TSR over five years, coming in at 3% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Suofeiya Home Collection is showing 2 warning signs in our investment analysis , you should know about...

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.