Stock Analysis

Would Shareholders Who Purchased Wah Ha Realty's (HKG:278) Stock Three Years Be Happy With The Share price Today?

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SEHK:278
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As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term Wah Ha Realty Company Limited (HKG:278) shareholders, since the share price is down 45% in the last three years, falling well short of the market decline of around 4.7%. The more recent news is of little comfort, with the share price down 28% in a year.

View our latest analysis for Wah Ha Realty

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...' 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).

Wah Ha Realty saw its share price decline over the three years in which its EPS also dropped, falling to a loss. This was, in part, due to extraordinary items impacting earnings. Due to the loss, it's not easy to use EPS as a reliable guide to the business. But it's safe to say we'd generally expect the share price to be lower as a result!

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
SEHK:278 Earnings Per Share Growth January 5th 2021

Dive deeper into Wah Ha Realty's key metrics by checking this interactive graph of Wah Ha Realty's earnings, revenue and cash flow.

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. As it happens, Wah Ha Realty's TSR for the last 3 years was -27%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Investors in Wah Ha Realty had a tough year, with a total loss of 23% (including dividends), against a market gain of about 8.9%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 0.3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Wah Ha Realty better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Wah Ha Realty (of which 1 is a bit unpleasant!) you should know about.

Of course Wah Ha Realty 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 HK exchanges.

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