Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of REM Group (Holdings) Limited (HKG:1750) have suffered share price declines over the last year. The share price has slid 59% in that time. We wouldn’t rush to judgement on REM Group (Holdings) because we don’t have a long term history to look at. The falls have accelerated recently, with the share price down 24% in the last three months.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
During the unfortunate twelve months during which the REM Group (Holdings) share price fell, it actually saw its earnings per share (EPS) improve by 4.9%. It could be that the share price was previously over-hyped.
It seems quite likely that the market was expecting higher growth from the stock. But other metrics might shed some light on why the share price is down.
REM Group (Holdings)’s revenue is actually up 8.8% over the last year. Since we can’t easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
The image below shows how earnings and revenue have 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. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on REM Group (Holdings)’s earnings, revenue and cash flow.
A Different Perspective
REM Group (Holdings) shareholders are down 59% for the year, even worse than the market loss of 1.8%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. The share price decline has continued throughout the most recent three months, down 24%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. 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. Like risks, for instance. Every company has them, and we’ve spotted 5 warning signs for REM Group (Holdings) (of which 2 are a bit concerning!) you should know about.
Of course REM Group (Holdings) 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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