Far East Hotels and Entertainment (HKG:37) delivers shareholders splendid 284% return over 1 year, surging 20% in the last week alone

By
Simply Wall St
Published
March 17, 2022
SEHK:37
Source: Shutterstock

Far East Hotels and Entertainment Limited (HKG:37) shareholders might be concerned after seeing the share price drop 15% in the last month. But that doesn't change the fact that the returns over the last year have been very strong. We're very pleased to report the share price shot up 284% in that time. So it may be that the share price is simply cooling off after a strong rise. More important, going forward, is how the business itself is going.

Since the stock has added HK$70m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Far East Hotels and Entertainment

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 last year Far East Hotels and Entertainment grew its earnings per share, moving from a loss to a profit.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.

We think that the revenue growth of 11% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
SEHK:37 Earnings and Revenue Growth March 17th 2022

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

We're pleased to report that Far East Hotels and Entertainment shareholders have received a total shareholder return of 284% over one year. That gain is better than the annual TSR over five years, which is 7%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Case in point: We've spotted 4 warning signs for Far East Hotels and Entertainment you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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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