MOG Holdings (HKG:1942) shareholders notch a 50% return over 1 year, yet earnings have been shrinking

By
Simply Wall St
Published
April 12, 2022
SEHK:1942
Source: Shutterstock

Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the MOG Holdings Limited (HKG:1942) share price is 47% higher than it was a year ago, much better than the market decline of around 21% (not including dividends) in the same period. That's a solid performance by our standards! MOG Holdings hasn't been listed for long, so it's still not clear if it is a long term winner.

The past week has proven to be lucrative for MOG Holdings investors, so let's see if fundamentals drove the company's one-year performance.

See our latest analysis for MOG Holdings

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...' 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.

During the last year, MOG Holdings actually saw its earnings per share drop 13%.

This means it's unlikely the market is judging the company based on earnings growth. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

We doubt the modest 1.5% dividend yield is doing much to support the share price. Unfortunately MOG Holdings' fell 25% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
SEHK:1942 Earnings and Revenue Growth April 12th 2022

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on MOG 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 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of MOG Holdings, it has a TSR of 50% for the last 1 year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

MOG Holdings shareholders should be happy with the total gain of 50% over the last twelve months, including dividends. And the share price momentum remains respectable, with a gain of 20% in the last three months. This suggests the company is continuing to win over new investors. It's always interesting to track share price performance over the longer term. But to understand MOG Holdings better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for MOG Holdings (of which 1 makes us a bit uncomfortable!) you should know about.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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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