Greenland Hong Kong Holdings (HKG:337) sheds CN¥526m, company earnings and investor returns have been trending downwards for past year

Even the best stock pickers will make plenty of bad investments. Unfortunately, shareholders of Greenland Hong Kong Holdings Limited (HKG:337) have suffered share price declines over the last year. The share price is down a hefty 59% in that time. Even if you look out three years, the returns are still disappointing, with the share price down57% in that time. More recently, the share price has dropped a further 36% in a month. We do note, however, that the broader market is down 18% in that period, and this may have weighed on the share price.

Since Greenland Hong Kong Holdings has shed CN¥526m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Greenland Hong Kong Holdings

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Unhappily, Greenland Hong Kong Holdings had to report a 27% decline in EPS over the last year. The share price decline of 59% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders are more nervous about the business. The less favorable sentiment is reflected in its current P/E ratio of 0.76.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on Greenland Hong Kong Holdings' 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. In the case of Greenland Hong Kong Holdings, it has a TSR of -53% for the last 1 year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While the broader market lost about 26% in the twelve months, Greenland Hong Kong Holdings shareholders did even worse, losing 53% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Greenland Hong Kong Holdings (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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. 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.