Reflecting on China Oriental Group's (HKG:581) Share Price Returns Over The Last Three Years

While it may not be enough for some shareholders, we think it is good to see the China Oriental Group Company Limited (HKG:581) share price up 26% in a single quarter. But that is small recompense for the exasperating returns over three years. Tragically, the share price declined 66% in that time. So it's good to see it climbing back up. The rise has some hopeful, but turnarounds are often precarious.

View our latest analysis for China Oriental Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the three years that the share price fell, China Oriental Group's earnings per share (EPS) dropped by 1.5% each year. This reduction in EPS is slower than the 30% annual reduction in the share price. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 3.09.

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

Dive deeper into China Oriental Group's key metrics by checking this interactive graph of China Oriental Group's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, China Oriental Group's TSR for the last 3 years was -56%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

China Oriental Group shareholders are down 16% for the year, (even including dividends), but the broader market is up 22%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Unfortunately, the longer term story isn't pretty, with investment losses running at 16% 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. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for China Oriental Group (of which 2 make us uncomfortable!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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