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If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But long term Emperor Capital Group Limited (HKG:717) shareholders have had a particularly rough ride in the last three year. So they might be feeling emotional about the 71% share price collapse, in that time. And over the last year the share price fell 42%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 19% in the last three months.
See our latest analysis for Emperor Capital Group
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).
During the three years that the share price fell, Emperor Capital Group's earnings per share (EPS) dropped by 32% each year. This change in EPS is reasonably close to the 34% average annual decrease in the share price. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. In this case, it seems that the EPS is guiding the share price.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
This free interactive report on Emperor Capital Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
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. Over the last 3 years, Emperor Capital Group generated a TSR of -68%, which is, of course, better than the share price return. Even though the company isn't paying dividends at the moment, it has done in the past.
A Different Perspective
While the broader market lost about 6.6% in the twelve months, Emperor Capital Group shareholders did even worse, losing 40%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.2% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Is Emperor Capital Group cheap compared to other companies? These 3 valuation measures might help you decide.