If You Had Bought Bank of Gansu's (HKG:2139) Shares Three Years Ago You Would Be Down 55%

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 Bank of Gansu Co., Ltd. (HKG:2139) have had an unfortunate run in the last three years. So they might be feeling emotional about the 55% share price collapse, in that time. There was little comfort for shareholders in the last week as the price declined a further 3.8%.

View our latest analysis for Bank of Gansu

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 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.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Bank of Gansu's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Bank of Gansu's TSR of was a loss of 53% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

The last twelve months weren't great for Bank of Gansu shares, which cost holders 3.1%, while the market was up about 36%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Unfortunately, the longer term story isn't pretty, with investment losses running at 15% per year over three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. 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. Case in point: We've spotted 2 warning signs for Bank of Gansu you should be aware of.

We will like Bank of Gansu 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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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. 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.
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