Royale Home Holdings (HKG:1198 investor one-year losses grow to 62% as the stock sheds HK$234m this past week

The nature of investing is that you win some, and you lose some. And unfortunately for Royale Home Holdings Limited (HKG:1198) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 63%. Even if you look out three years, the returns are still disappointing, with the share price down48% in that time. Shareholders have had an even rougher run lately, with the share price down 24% in the last 90 days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

Since Royale Home Holdings has shed HK$234m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Royale Home Holdings

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Royale Home Holdings fell to a loss making position during the year. Some investors no doubt dumped the stock as a result. Of course, if the company can turn the situation around, investors will likely profit.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

This free interactive report on Royale Home Holdings' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 0.5% in the twelve months, Royale Home Holdings shareholders did even worse, losing 62%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Royale Home Holdings is showing 2 warning signs in our investment analysis , you should know about...

Of course Royale Home 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 Hong Kong exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.