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The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the Golden Faith Group Holdings Limited (HKG:2863) share price is down 22% in the last year. That's disappointing when you consider the market returned 9.1%. Golden Faith Group Holdings hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. It's down 31% in about a quarter. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
Check out our latest analysis for Golden Faith Group 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 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.
Unhappily, Golden Faith Group Holdings had to report a 19% decline in EPS over the last year. We note that the 22% share price drop is very close to the EPS drop. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price has approximately tracked EPS growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Golden Faith Group Holdings's earnings, revenue and cash flow.
A Different Perspective
While Golden Faith Group Holdings shareholders are down 22% for the year, the market itself is up 9.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Notably, the loss over the last year isn't as bad as the 31% drop in the last three months. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.