Pulling back 10% this week, Yee Hop Holdings' HKG:1662) five-year decline in earnings may be coming into investors focus

By
Simply Wall St
Published
November 17, 2021
SEHK:1662
Source: Shutterstock

Yee Hop Holdings Limited (HKG:1662) shareholders might be concerned after seeing the share price drop 20% in the last month. On the bright side the returns have been quite good over the last half decade. After all, the share price is up a market-beating 52% in that time. Unfortunately not all shareholders will have held it for the long term, so spare a thought for those caught in the 52% decline over the last twelve months.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

View our latest analysis for Yee Hop Holdings

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During five years of share price growth, Yee Hop Holdings actually saw its EPS drop 16% per year.

Essentially, it doesn't seem likely that investors are focused on EPS. Because earnings per share don't seem to match up with the share price, we'll take a look at other metrics instead.

In contrast revenue growth of 15% per year is probably viewed as evidence that Yee Hop Holdings is growing, a real positive. In that case, the company may be sacrificing current earnings per share to drive growth.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
SEHK:1662 Earnings and Revenue Growth November 17th 2021

If you are thinking of buying or selling Yee Hop Holdings stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Investors in Yee Hop Holdings had a tough year, with a total loss of 52%, against a market gain of about 1.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 9% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Take risks, for example - Yee Hop Holdings has 5 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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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