Despite the downward trend in earnings at SciClone Pharmaceuticals (Holdings) (HKG:6600) the stock ascends 3.5%, bringing one-year gains to 58%
These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the SciClone Pharmaceuticals (Holdings) Limited (HKG:6600) share price is 52% higher than it was a year ago, much better than the market decline of around 2.0% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! We'll need to follow SciClone Pharmaceuticals (Holdings) for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
Since the stock has added HK$585m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
See our latest analysis for SciClone Pharmaceuticals (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.
Over the last twelve months, SciClone Pharmaceuticals (Holdings) actually shrank its EPS by 5.8%.
Given the share price gain, we doubt the market is measuring progress with EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
However the year on year revenue growth of 27% would help. We do see some companies suppress earnings in order to accelerate revenue growth.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling SciClone Pharmaceuticals (Holdings) stock, you should check out this FREE detailed report on its balance sheet.
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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for SciClone Pharmaceuticals (Holdings) the TSR over the last 1 year was 58%, 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
SciClone Pharmaceuticals (Holdings) shareholders should be happy with the total gain of 58% over the last twelve months, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 20% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with SciClone Pharmaceuticals (Holdings) , and understanding them should be part of your investment process.
Of course SciClone Pharmaceuticals (Holdings) 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 Hong Kong exchanges.
Valuation is complex, but we're helping make it simple.
Find out whether SciClone Pharmaceuticals (Holdings) is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.
SciClone Pharmaceuticals (Holdings)
SciClone Pharmaceuticals (Holdings) Limited, a biopharmaceutical company, engages in the development and commercialization of pharmaceutical products in the therapeutic areas of oncology and severe infection in Mainland China and internationally.
Excellent balance sheet and good value.