Stock Analysis

The total return for Oriental Watch Holdings (HKG:398) investors has risen faster than earnings growth over the last three years

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SEHK:398
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It hasn't been the best quarter for Oriental Watch Holdings Limited (HKG:398) shareholders, since the share price has fallen 15% in that time. But in three years the returns have been great. The share price marched upwards over that time, and is now 167% higher than it was. So the recent fall in the share price should be viewed in that context. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

Although Oriental Watch Holdings has shed HK$258m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for Oriental Watch 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.

Oriental Watch Holdings was able to grow its EPS at 45% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 39% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Au contraire, the share price change has arguably mimicked the EPS growth.

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:398 Earnings Per Share Growth September 30th 2022

Dive deeper into Oriental Watch Holdings' key metrics by checking this interactive graph of Oriental Watch Holdings'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. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Oriental Watch Holdings the TSR over the last 3 years was 316%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Oriental Watch Holdings has rewarded shareholders with a total shareholder return of 43% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 37%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Take risks, for example - Oriental Watch Holdings has 1 warning sign we think you should be aware of.

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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About SEHK:398

Oriental Watch Holdings

Oriental Watch Holdings Limited, an investment holding company, engages in watch trading business in Hong Kong, Macau, Taiwan, and Mainland China.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth0
Past Performance4
Financial Health6
Dividends5

Read more about these checks in the individual report sections or in our analysis model.

Flawless balance sheet established dividend payer.