Tongcheng Travel Holdings Limited (HKG:780) shareholders might be concerned after seeing the share price drop 22% in the last quarter. Looking further back, the stock has generated good profits over five years. Its return of 30% has certainly bested the market return!
Although Tongcheng Travel Holdings has shed HK$1.1b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
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 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.
During the last half decade, Tongcheng Travel Holdings became profitable. That's generally thought to be a genuine positive, so we would expect to see an increasing share price.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Tongcheng Travel Holdings has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Tongcheng Travel Holdings will grow revenue in the future.
A Different Perspective
We regret to report that Tongcheng Travel Holdings shareholders are down 23% for the year. Unfortunately, that's worse than the broader market decline of 8.7%. 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. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Is Tongcheng Travel Holdings cheap compared to other companies? These 3 valuation measures might help you decide.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.
Valuation is complex, but we're helping make it simple.
Find out whether Tongcheng Travel Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.