The three-year shareholder returns and company earnings persist lower as COSCO SHIPPING Ports (HKG:1199) stock falls a further 3.3% in past week

Many investors define successful investing as beating the market average over the long term. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term COSCO SHIPPING Ports Limited (HKG:1199) shareholders have had that experience, with the share price dropping 31% in three years, versus a market decline of about 13%.

If the past week is anything to go by, investor sentiment for COSCO SHIPPING Ports isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for COSCO SHIPPING Ports

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

COSCO SHIPPING Ports saw its EPS decline at a compound rate of 8.6% per year, over the last three years. The share price decline of 12% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. This increased caution is also evident in the rather low P/E ratio, which is sitting at 6.85.

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

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

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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, COSCO SHIPPING Ports' TSR for the last 3 years was -18%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

COSCO SHIPPING Ports shareholders are up 1.0% for the year (even including dividends). Unfortunately this falls short of the market return. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 3% over five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand COSCO SHIPPING Ports better, we need to consider many other factors. Even so, be aware that COSCO SHIPPING Ports is showing 1 warning sign in our investment analysis , you should know about...

But note: COSCO SHIPPING Ports 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 Hong Kong exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.