In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the main game is to find enough winners to more than offset the losers So we wouldn't blame long term BII Railway Transportation Technology Holdings Company Limited (HKG:1522) shareholders for doubting their decision to hold, with the stock down 51% over a half decade. It's down 6.0% in the last seven days.
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the five years over which the share price declined, BII Railway Transportation Technology Holdings' earnings per share (EPS) dropped by 3.1% each year. Readers should note that the share price has fallen faster than the EPS, at a rate of 13% per year, over the period. So it seems the market was too confident about the business, in the past.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It might be well worthwhile taking a look at our free report on BII Railway Transportation Technology 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. 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. As it happens, BII Railway Transportation Technology Holdings' TSR for the last 5 years was -47%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
BII Railway Transportation Technology Holdings shareholders have received returns of 24% over twelve months (even including dividends), which isn't far from the general market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 8%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for BII Railway Transportation Technology Holdings. It's always interesting to track share price performance over the longer term. But to understand BII Railway Transportation Technology Holdings better, we need to consider many other factors. Even so, be aware that BII Railway Transportation Technology Holdings is showing 2 warning signs in our investment analysis , you should know about...
Of course BII Railway Transportation Technology Holdings 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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This article by Simply Wall St is general in nature. 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.
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