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It's been a soft week for Billion Industrial Holdings Limited (HKG:2299) shares, which are down 10%. On the bright side the returns have been quite good over the last half decade. It has returned a market beating 57% in that time. Unfortunately not all shareholders will have held it for the long term, so spare a thought for those caught in the 38% decline over the last twelve months.
View our latest analysis for Billion Industrial Holdings
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 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.
Over half a decade, Billion Industrial Holdings managed to grow its earnings per share at 32% a year. The EPS growth is more impressive than the yearly share price gain of 9.4% over the same period. So one could conclude that the broader market has become more cautious towards the stock.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
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. It might be well worthwhile taking a look at our free report on Billion Industrial Holdings's earnings, revenue and cash flow.
A Dividend Lost
The value of past dividends are accounted for in the total shareholder return (TSR), but not in the share price return mentioned above. Many would argue the TSR gives a more complete picture of the value a stock brings to its holders. Billion Industrial Holdings's TSR over the last 5 years is 67%; better than its share price return. Although the company had to cut dividends, it has paid cash to shareholders in the past.
A Different Perspective
We regret to report that Billion Industrial Holdings shareholders are down 38% for the year. Unfortunately, that's worse than the broader market decline of 5.5%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 11%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. If you would like to research Billion Industrial Holdings in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.