In This Article:
In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But in any portfolio, there will be mixed results between individual stocks. So we wouldn't blame long term China Huirong Financial Holdings Limited (HKG:1290) shareholders for doubting their decision to hold, with the stock down 23% over a half decade. The silver lining is that the stock is up 2.9% in about a week.
View our latest analysis for China Huirong Financial Holdings
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. 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.
Looking back five years, both China Huirong Financial Holdings's share price and EPS declined; the latter at a rate of 17% per year. This fall in the EPS is worse than the 5.2% compound annual share price fall. The relatively muted share price reaction might be because the market expects the business to turn around.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into China Huirong Financial Holdings's key metrics by checking this interactive graph of China Huirong Financial Holdings's earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, China Huirong Financial Holdings's TSR for the last 5 years was -19%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We're pleased to report that China Huirong Financial Holdings shareholders have received a total shareholder return of 8.4% over one year. Of course, that includes the dividend. There's no doubt those recent returns are much better than the TSR loss of 4.1% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. Before forming an opinion on China Huirong Financial Holdings you might want to consider these 3 valuation metrics.