If You Had Bought Wenzhou Kangning Hospital's (HKG:2120) Shares Five Years Ago You Would Be Down 42%

It is a pleasure to report that the Wenzhou Kangning Hospital Co., Ltd. (HKG:2120) is up 60% in the last quarter. But over the last half decade, the stock has not performed well. After all, the share price is down 42% in that time, significantly under-performing the market.

View our latest analysis for Wenzhou Kangning Hospital

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 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.

Looking back five years, both Wenzhou Kangning Hospital's share price and EPS declined; the latter at a rate of 12% per year. This fall in the EPS is worse than the 10% compound annual share price fall. So the market may previously have expected a drop, or else it expects the situation will improve.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of Wenzhou Kangning Hospital's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Wenzhou Kangning Hospital shareholders have received a total shareholder return of 30% over one year. There's no doubt those recent returns are much better than the TSR loss of 7% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Wenzhou Kangning Hospital better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Wenzhou Kangning Hospital you should be aware of.

Wenzhou Kangning Hospital is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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