Strong week for Starlite Holdings (HKG:403) shareholders doesn't alleviate pain of three-year loss

Starlite Holdings Limited (HKG:403) shareholders should be happy to see the share price up 13% in the last week. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 40% in the last three years, significantly under-performing the market.

Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.

View our latest analysis for Starlite Holdings

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 five years of share price growth, Starlite Holdings moved from a loss to profitability. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.

We note that the dividend seems healthy enough, so that probably doesn't explain the share price drop. However, the weak share price might be related to the fact revenue has been disappearing at a rate of 9.3% each year, over three years. This could have some investors worried about the longer term growth potential (or lack thereof).

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Starlite Holdings' balance sheet strength 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. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Starlite Holdings' TSR for the last 3 years was -7.1%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Starlite Holdings' TSR for the year was broadly in line with the market average, at 25%. That gain looks pretty satisfying, and it is even better than the five-year TSR of 4% per year. It is possible that management foresight will bring growth well into the future, even if the share price slows down. It's always interesting to track share price performance over the longer term. But to understand Starlite Holdings better, we need to consider many other factors. For example, we've discovered 2 warning signs for Starlite Holdings that you should be aware of before investing here.

But note: Starlite 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 Hong Kong 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.