Stock Analysis

Investors Who Bought MECOM Power and Construction (HKG:1183) Shares A Year Ago Are Now Up 137%

SEHK:1183
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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example MECOM Power and Construction Limited (HKG:1183). Its share price is already up an impressive 137% in the last twelve months. Also pleasing for shareholders was the 96% gain in the last three months. We'll need to follow MECOM Power and Construction for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

See our latest analysis for MECOM Power and Construction

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 last year MECOM Power and Construction grew its earnings per share (EPS) by 66%. The share price gain of 137% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock. The fairly generous P/E ratio of 51.16 also points to this optimism.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
SEHK:1183 Earnings Per Share Growth December 14th 2020

This free interactive report on MECOM Power and Construction's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for MECOM Power and Construction the TSR over the last year was 148%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that MECOM Power and Construction shareholders have gained 148% over the last year, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 96% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. 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 MECOM Power and Construction is showing 3 warning signs in our investment analysis , and 2 of those can't be ignored...

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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Valuation is complex, but we're helping make it simple.

Find out whether MECOM Power and Construction is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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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