Stock Analysis

Giordano International's(HKG:709) Share Price Is Down 65% Over The Past Three Years.

SEHK:709
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Giordano International Limited (HKG:709) shareholders will doubtless be very grateful to see the share price up 36% in the last quarter. But that is small recompense for the exasperating returns over three years. Tragically, the share price declined 65% in that time. Some might say the recent bounce is to be expected after such a bad drop. While many would remain nervous, there could be further gains if the business can put its best foot forward.

See our latest analysis for Giordano International

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. 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 three years that the share price declined, Giordano International's earnings per share (EPS) dropped significantly, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. However, we can say we'd expect to see a falling share price in this scenario.

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:709 Earnings Per Share Growth March 16th 2021

This free interactive report on Giordano International's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, Giordano International's TSR for the last 3 years was -56%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Giordano International provided a TSR of 5.3% over the last twelve months. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 6% per year, over five years. So this might be a sign the business has turned its fortunes around. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Giordano International (of which 1 is significant!) you should know about.

But note: Giordano International may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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:709

Giordano International

An investment holding company, engages in the retail and distribution of men’s, women’s, and children’s fashion apparel and accessories in Mainland China, Hong Kong, Macau, Taiwan, Southeast Asia and Australia, Gulf Cooperation Council, and internationally.

Flawless balance sheet with solid track record.