China Beststudy Education Group (HKG:3978) shareholders are in the red if they invested three years ago

China Beststudy Education Group (Hong Kong: 3978) shareholders will no doubt be very grateful to see the share price soar 45% in the last quarter. But the last three years have seen a terrible decline. Indeed, the stock price has fallen 81% over the past three years. It is therefore time for shareholders to see gains. The thing to think about is whether the business has truly recovered. While a drop like that is definitely a blow, money isn’t as important as health and happiness.

So let’s take a look and see if the company’s long-term performance has been in line with the progress of the underlying business.

Our analysis indicates that 3978 is potentially overvalued!

To paraphrase Benjamin Graham: in the short term, the market is a voting machine, but in the long term, it is a weighing machine. An imperfect but simple way to examine how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.

In the three years of declining share price, China Beststudy Education Group’s earnings per share (EPS) fell significantly, falling to a loss. This was partly due to extraordinary items impacting earnings. Due to the loss, it is not easy to use EPS as a reliable guide to business. However, we can say that we expect to see a decline in the stock price in this scenario.

The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).

SEHK: 3978 Earnings per share growth Nov 1, 2022

This free interactive report on China Beststudy Education Group profit, turnover and cash flow is a great place to start, if you want to investigate the stock further.

A different perspective

While it is never pleasant to suffer a loss, shareholders of China Beststudy Education Group can rest assured that their 1.8% year-over-year loss was not as bad as the market’s loss of around – 33%. Additionally, the stock lost 22% of shareholders per year over three years, so the one-year return was better in a relative sense. Activity may well have started to stabilize, although recent returns have not been impressive. It is always interesting to follow the evolution of the share price over the long term. But to better understand China Beststudy Education Group, we need to consider many other factors. Even so, know that China Beststudy Education Group shows 2 warning signs in our investment analysis and 1 of them cannot be ignored…

For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on HK exchanges.

Valuation is complex, but we help make it simple.

Find out if China Beststudy Education Group is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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