Investors five-year losses continue as Asia Financial Holdings (HKG:662) dips a further 10% this week, earnings continue to decline

While it may not be enough for some shareholders, we think it is good to see the Asia Financial Holdings Limited (HKG:662) share price up 14% in a single quarter. But over the last half decade, the stock has not performed well. In fact, the share price is down 26%, which falls well short of the return you could get by buying an index fund.

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

See our latest analysis for Asia Financial Holdings

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...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the five years over which the share price declined, Asia Financial Holdings' earnings per share (EPS) dropped by 5.0% each year. This change in EPS is reasonably close to the 6% average annual decrease in the share price. This implies that the market has had a fairly steady view of the stock. Rather, the share price change has reflected changes in earnings per share.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Asia Financial Holdings the TSR over the last 5 years was -17%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While it's certainly disappointing to see that Asia Financial Holdings shares lost 1.3% throughout the year, that wasn't as bad as the market loss of 8.7%. Of far more concern is the 3% p.a. loss served to shareholders over the last five years. While the losses are slowing we doubt many shareholders are happy with the stock. 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. Even so, be aware that Asia Financial Holdings is showing 2 warning signs in our investment analysis , you should know about...

But note: Asia Financial Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.