Technovator International's (HKG:1206) Shareholders Are Down 84% On Their Shares

While not a mind-blowing move, it is good to see that the Technovator International Limited (HKG:1206) share price has gained 22% in the last three months. But will that heal all the wounds inflicted over 5 years of declines? Unlikely. In fact, the share price has tumbled down a mountain to land 84% lower after that period. While the recent increase might be a green shoot, we're certainly hesitant to rejoice. The million dollar question is whether the company can justify a long term recovery.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

See our latest analysis for Technovator International

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Looking back five years, both Technovator International's share price and EPS declined; the latter at a rate of 16% per year. This reduction in EPS is less than the 30% annual reduction in the share price. This implies that the market is more cautious about the business these days. The less favorable sentiment is reflected in its current P/E ratio of 5.55.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into Technovator International's key metrics by checking this interactive graph of Technovator International's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Technovator International has rewarded shareholders with a total shareholder return of 35% in the last twelve months. That certainly beats the loss of about 13% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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 Technovator International (at least 1 which is significant) , and understanding them should be part of your investment process.

But note: Technovator 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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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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