The last three months have been tough on Intron Technology Holdings Limited (HKG:1760) shareholders, who have seen the share price decline a rather worrying 39%. But that doesn't detract from the splendid returns of the last year. We're very pleased to report the share price shot up 137% in that time. So it may be that the share price is simply cooling off after a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over the last twelve months, Intron Technology Holdings actually shrank its EPS by 20%.
Given the share price gain, we doubt the market is measuring progress with EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
We doubt the modest 0.6% dividend yield is doing much to support the share price. Intron Technology Holdings' revenue actually dropped 14% over last year. So the fundamental metrics don't provide an obvious explanation for the share price gain.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Intron Technology Holdings' TSR for the last year was 141%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Intron Technology Holdings shareholders should be happy with the total gain of 141% over the last twelve months, including dividends. Unfortunately the share price is down 39% over the last quarter. Shorter term share price moves often don't signify much about the business itself. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for Intron Technology Holdings that you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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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