38% earnings growth over 1 year has not materialized into gains for Edvantage Group Holdings (HKG:382) shareholders over that period

Investing in stocks comes with the risk that the share price will fall. And unfortunately for Edvantage Group Holdings Limited (HKG:382) shareholders, the stock is a lot lower today than it was a year ago. To wit the share price is down 57% in that time. Because Edvantage Group Holdings hasn't been listed for many years, the market is still learning about how the business performs. Furthermore, it's down 22% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for Edvantage Group Holdings isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Edvantage Group Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Even though the Edvantage Group Holdings share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

The divergence between the EPS and the share price is quite notable, during the year. So it's easy to justify a look at some other metrics.

Edvantage Group Holdings' dividend seems healthy to us, so we doubt that the yield is a concern for the market. From what we can see, revenue is pretty flat, so that doesn't really explain the share price drop. Unless, of course, the market was expecting a revenue uptick.

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

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for Edvantage Group Holdings in this interactive graph of future profit estimates.

A Different Perspective

We doubt Edvantage Group Holdings shareholders are happy with the loss of 56% over twelve months (even including dividends). That falls short of the market, which lost 14%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 22% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand Edvantage Group Holdings better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Edvantage Group Holdings you should be aware of.

Edvantage Group Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider 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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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.