Hebei Construction Group's (HKG:1727) Stock Price Has Reduced 35% In The Past Year

The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Hebei Construction Group Corporation Limited (HKG:1727) have tasted that bitter downside in the last year, as the share price dropped 35%. That contrasts poorly with the market return of 24%. However, the longer term returns haven't been so bad, with the stock down 24% in the last three years. In the last ninety days we've seen the share price slide 87%.

View our latest analysis for Hebei Construction Group

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.

Unhappily, Hebei Construction Group had to report a 59% decline in EPS over the last year. This fall in the EPS is significantly worse than the 35% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Hebei Construction Group's earnings, revenue and cash flow.

A Different Perspective

The last twelve months weren't great for Hebei Construction Group shares, which cost holders 34%, including dividends, while the market was up about 24%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 6% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand Hebei Construction Group better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Hebei Construction Group (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

Of course Hebei Construction Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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