Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!

While not a mind-blowing move, it is good to see that the Baguio Green Group Limited (HKG:1397) share price has gained 24% in the last three months. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 12% in the last three years, significantly under-performing the market.

Check out our latest analysis for Baguio Green Group

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 that the share price fell, Baguio Green Group's earnings per share (EPS) dropped by 9.4% each year. In comparison the 4.2% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Baguio Green Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. In the case of Baguio Green Group, it has a TSR of -7.0% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We can sympathize with Baguio Green Group about their 0.9% loss for the year ( including dividends), but the silver lining is that the broader market return was worse, at around -1.3%. The one-year return is also not as bad as the 2.4% per annum loss investors have suffered over the last three years. It is of course not much comfort to know that the losses have slowed. Shareholders will be hoping for a proper turnaround, no doubt. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.