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It might be of some concern to shareholders to see the Ronshine China Holdings Limited (HKG:3301) share price down 11% in the last month. But over three years, the returns would have left most investors smiling To wit, the share price did better than an index fund, climbing 58% during that period.
View our latest analysis for Ronshine China 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.
During the three years of share price growth, Ronshine China Holdings actually saw its earnings per share (EPS) drop 0.7% per year. Based on these numbers, we think that the decline in earnings per share may not be a good representation of how the business has changed over the years. So other metrics may hold the key to understanding what is influencing investors.
It could be that the revenue growth of 50% per year is viewed as evidence that Ronshine China Holdings is growing. If the company is being managed for the long term good, today's shareholders might be right to hold on.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
Ronshine China Holdings shareholders are down 17% for the year (even including dividends), falling short of the market return. The market shed around 14%, no doubt weighing on the stock price. Investors are up over three years, booking 16% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
But note: Ronshine China Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).