It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Most Kwai Chung Limited (HKG:1716) have tasted that bitter downside in the last year, as the share price dropped 42%. That's disappointing when you consider the market returned -5.2%. Because Most Kwai Chung hasn't been listed for many years, the market is still learning about how the business performs. It's down 2.9% in the last seven days.

View our latest analysis for Most Kwai Chung

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Even though the Most Kwai Chung share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

The divergence between the EPS and the share price is quite notable, during the year. So it's well worth checking out some other metrics, too.

We don't see any weakness in the Most Kwai Chung's dividend so the steady payout can't really explain the share price drop. The revenue trend doesn't seem to explain why the share price is down. Of course, it could simply be that it simply fell short of the market consensus expectations.

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 Most Kwai Chung stock, you should check out this FREE detailed report on its balance sheet.

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Most Kwai Chung the TSR over the last year was -39%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We doubt Most Kwai Chung shareholders are happy with the loss of 39% over twelve months (even including dividends) . That falls short of the market, which lost 5.2%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 8.2% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Most Kwai Chung better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Most Kwai Chung (at least 1 which is significant) , and understanding them should be part of your investment process.