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It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by TK Group (Holdings) Limited (HKG:2283) shareholders over the last year, as the share price declined 51%. That's disappointing when you consider the market declined 15%. The silver lining (for longer term investors) is that the stock is still 6.7% higher than it was three years ago. Shareholders have had an even rougher run lately, with the share price down 34% in the last 90 days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
See our latest analysis for TK Group (Holdings)
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...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Unfortunately TK Group (Holdings) reported an EPS drop of 14% for the last year. This reduction in EPS is not as bad as the 51% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business. The less favorable sentiment is reflected in its current P/E ratio of 7.51.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
This free interactive report on TK Group (Holdings)'s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, TK Group (Holdings)'s TSR for the last year was -49%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We regret to report that TK Group (Holdings) shareholders are down 49% for the year (even including dividends) . Unfortunately, that's worse than the broader market decline of 15%. 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. On the bright side, long term shareholders have made money, with a gain of 8.7% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand TK Group (Holdings) better, we need to consider many other factors. Take risks, for example - TK Group (Holdings) has 2 warning signs we think you should be aware of.