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China Boqi Environmental (Holding) Co., Ltd. (HKG:2377) shareholders should be happy to see the share price up 25% in the last quarter. But that doesn't change the reality of under-performance over the last twelve months. After all, the share price is down 17% in the last year, significantly under-performing the market.
See our latest analysis for China Boqi Environmental (Holding)
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Unfortunately China Boqi Environmental (Holding) reported an EPS drop of 26% for the last year. The share price fall of 17% isn't as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of China Boqi Environmental (Holding), it has a TSR of -12% for the last year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Given that the market gained 10.0% in the last year, China Boqi Environmental (Holding) shareholders might be miffed that they lost 12% (even including dividends) . However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 25% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.