On average, over time, stock markets tend to rise higher. This makes investing attractive. But if you choose that path, you're going to buy some stocks that fall short of the market. Over the last year the Q P Group Holdings Limited (HKG:1412) share price is up 24%, but that's less than the broader market return. Q P Group Holdings hasn't been listed for long, so it's still not clear if it is a long term winner.
There is no denying that markets are sometimes efficient, but prices do not always reflect 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.
Q P Group Holdings was able to grow EPS by 21% in the last twelve months. This EPS growth is reasonably close to the 24% increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. It looks like the share price is responding to the EPS.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into Q P Group Holdings' key metrics by checking this interactive graph of Q P Group Holdings's earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Q P Group Holdings the TSR over the last year was 39%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
With a TSR of 39% over the last year, Q P Group Holdings shareholders would be reasonably content, given that's not far from the broader market return of 43%. And the stock has been on a nice little run lately, with the price climbing 26% higher in 90 days. This suggests the share price maintains some momentum, and investors are taking a more positive view of the stock. It's always interesting to track share price performance over the longer term. But to understand Q P Group Holdings better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Q P Group Holdings .
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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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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