Shandong International Trust's(HKG:1697) Share Price Is Down 71% Over The Past Three Years.

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But long term Shandong International Trust Co., Ltd. (HKG:1697) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 71% decline in the share price in that time. The good news is that the stock is up 2.9% in the last week.

View our latest analysis for Shandong International Trust

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the three years that the share price fell, Shandong International Trust's earnings per share (EPS) dropped by 7.6% each year. The share price decline of 34% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 3.33.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Shandong International Trust's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Shandong International Trust the TSR over the last 3 years was -63%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Shandong International Trust shareholders are down 9.8% for the year, (even including dividends), but the broader market is up 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, the longer term story isn't pretty, with investment losses running at 18% per year over three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. It's always interesting to track share price performance over the longer term. But to understand Shandong International Trust better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Shandong International Trust (of which 1 doesn't sit too well with us!) you should know about.

Of course Shandong International Trust 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 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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