Volatility 101: Should Man Yue Technology Holdings Shares Have Dropped 47%?

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Man Yue Technology Holdings Limited (HKG:894) shareholders should be happy to see the share price up 24% in the last quarter. But that doesn’t change the fact that the returns over the last five years have been less than pleasing. In fact, the share price is down 47%, which falls well short of the return you could get by buying an index fund.

View our latest analysis for Man Yue Technology Holdings

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.

In the last five years Man Yue Technology Holdings improved its bottom line results, having previously been loss-making. Most would consider that to be a good thing, so it’s counter-intuitive to see the share price declining.

The revenue decline of 1.7% isn’t too bad. But if the market expected durable top line growth, then that could explain the share price weakness.

Depicted in the graphic below, you’ll see revenue and earnings over time. If you want more detail, you can click on the chart itself.

SEHK:894 Income Statement, February 25th 2019
SEHK:894 Income Statement, February 25th 2019

You can see how its financial situation has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We regret to report that Man Yue Technology Holdings shareholders are down 34% for the year. Unfortunately, that’s even worse than the broader market decline of 7.7%. Having said that, its inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Before deciding if you like the current share price, check how Man Yue Technology Holdings scores on these 3 valuation metrics.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.