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The main aim of stock picking is to find the market-beating stocks. But every investor is virtually certain to have both over-performing and under-performing stocks. At this point some shareholders may be questioning their investment in CL Group (Holdings) Limited (HKG:8098), since the last five years saw the share price fall 61%. Even worse, it's down 8.7% in about a month, which isn't fun at all. But this could be related to poor market conditions -- stocks are down 8.1% in the same time.
See our latest analysis for CL Group (Holdings)
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
During the five years over which the share price declined, CL Group (Holdings)'s earnings per share (EPS) dropped by 8.8% each year. Readers should note that the share price has fallen faster than the EPS, at a rate of 17% per year, over the period. This implies that the market is more cautious about the business these days.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for CL Group (Holdings) the TSR over the last 5 years was -50%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
While it's certainly disappointing to see that CL Group (Holdings) shares lost 4.6% throughout the year, that wasn't as bad as the market loss of 17%. Of far more concern is the 13% p.a. loss served to shareholders over the last five years. While the losses are slowing we doubt many shareholders are happy with the stock. Before forming an opinion on CL Group (Holdings) you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.