As an investor, mistakes are inevitable. But you want to avoid the really big losses like the plague. So take a moment to sympathize with the long term shareholders of V.S. International Group Limited (HKG:1002), who have seen the share price tank a massive 73% over a three year period. That would certainly shake our confidence in the decision to own the stock. The more recent news is of little comfort, with the share price down 62% in a year. The falls have accelerated recently, with the share price down 18% in the last three months.
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. By comparing earnings per share (EPS) and and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
It’s good to see that V.S. International Group went from making a loss to making a profit, within the last three years. We would usually expect to see the share price rise as a result. So it’s worth looking at other metrics to try to understand the share price move.
We note that, in three years, revenue has actually grown at a 11% annual rate, so that doesn’t seem to be a reason to sell shares. It’s probably worht worth investigating V.S. International Group further; while we may be missing something on this analysis, there might also be an opportunity.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
Take a more thorough look at V.S. International Group’s financial health with this free report on its balance sheet.
A Different Perspective
We regret to report that V.S. International Group shareholders are down 62% for the year. Unfortunately, that’s even worse than the broader market decline of 7.3%. Having said that, its inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 19% over the last half decade. We realise that Buffett has said investors should ‘buy when there is blood on the streets’, but we caution that investors should first be sure they are buying a high quality businesses. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.