Stock Analysis

Khoon Group's (HKG:924) Shareholders Are Down 15% On Their Shares

SEHK:924
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It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Khoon Group Limited (HKG:924) shareholders over the last year, as the share price declined 15%. That's well below the market return of 12%. Because Khoon Group hasn't been listed for many years, the market is still learning about how the business performs.

See our latest analysis for Khoon Group

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.

Unfortunately Khoon Group reported an EPS drop of 24% for the last year. This fall in the EPS is significantly worse than the 15% 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.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
SEHK:924 Earnings Per Share Growth November 25th 2020

Dive deeper into Khoon Group's key metrics by checking this interactive graph of Khoon Group's earnings, revenue and cash flow.

A Different Perspective

Given that the market gained 12% in the last year, Khoon Group shareholders might be miffed that they lost 15%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Putting aside the last twelve months, it's good to see the share price has rebounded by 3.4%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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. For instance, we've identified 2 warning signs for Khoon Group (1 shouldn't be ignored) that you should be aware of.

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.

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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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