Sprocomm Intelligence's(HKG:1401) Share Price Is Down 29% Over The Past Year.

It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the Sprocomm Intelligence Limited (HKG:1401) share price slid 29% over twelve months. That's disappointing when you consider the market returned 29%. We wouldn't rush to judgement on Sprocomm Intelligence because we don't have a long term history to look at. The falls have accelerated recently, with the share price down 26% in the last three months.

View our latest analysis for Sprocomm Intelligence

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. 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.

Unhappily, Sprocomm Intelligence had to report a 28% decline in EPS over the last year. We note that the 29% share price drop is very close to the EPS drop. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Instead, the change in the share price seems to reduction in earnings per share, alone.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Sprocomm Intelligence's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While Sprocomm Intelligence shareholders are down 29% for the year, the market itself is up 29%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 26%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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 4 warning signs with Sprocomm Intelligence (at least 2 which are concerning) , and understanding them should be part of your investment process.

Of course Sprocomm Intelligence 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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