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For many, the main point of investing is to generate higher returns than the overall market. But even the best stock picker will only win with some selections. So we wouldn't blame long term Rykadan Capital Limited (HKG:2288) shareholders for doubting their decision to hold, with the stock down 49% over a half decade. It's down 1.5% in the last seven days.
See our latest analysis for Rykadan Capital
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.
Rykadan Capital became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.
The steady dividend doesn't really explain why the share price is down. However, revenue has declined at a compound annual rate of 6.0% per year. With dividends up, but revenue down, some investors might be concluding that the company is no longer growing.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Rykadan Capital stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 Rykadan Capital, it has a TSR of -36% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Rykadan Capital's TSR for the year was broadly in line with the market average, at 13%. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 8.5% over the last five years. We're pretty skeptical of turnaround stories, but it's good to see the recent share price recovery. Importantly, we haven't analysed Rykadan Capital's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.