While SSY Group (HKG: 2005) shareholders have been in the red for the past three years, underlying earnings have actually increased

In order to justify the effort of picking individual stocks, it is worth striving to beat the returns of an index fund. But if you try your hand at stock picking, you may underperform the market. Unfortunately, this has been the case for longer SSY Group Limited (HKG: 2005) shareholders, as the stock price is down 46% over the past three years, well below the market decline of around 20%. Moreover, it fell by 10% in about a quarter. It’s not much fun for the holders. Of course, this stock price move may well have been influenced by the 18% decline in the broader market throughout the period.

With the stock up 7.4% last week but long-term shareholders still in the red, let’s see what the fundamentals can tell us.

Check opportunities and risks within the Hong Kong pharmaceutical industry.

To quote Buffett, “Ships will circumnavigate the globe, but the Flat Earth Society will prosper. There will continue to be wide gaps between price and value in the market…’ By comparing earnings per share (EPS) and share price changes over time, we can get an idea changes in investors’ attitude towards a company over time.

Although the share price has declined over three years, SSY Group has actually managed to increase EPS by 2.5% per year during this period. It’s quite a puzzle and suggests that there could be something temporarily supporting the stock price. Or the company was too high profile in the past, and its growth has therefore disappointed.

It is quite reasonable to suspect that the market was previously bullish on the stock and has since moderated expectations. However, taking a look at other trade metrics might shed a little more light on the stock price move.

Revenues were actually up 12% over the three years, so the decline in share price doesn’t seem to be dependent on revenue either. This analysis is only superficial, but it might be useful to research SSY Group further, as shares sometimes fall unfairly. This could represent an opportunity.

The graph below illustrates the evolution of income and income over time (reveal the exact values ​​by clicking on the image).

SEHK: 2005 Earnings and Revenue Growth November 5, 2022

We know that SSY Group has recently improved its results, but what does the future hold? This free report showing analyst forecasts should help you form an opinion about SSY Group

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. It can be said that the TSR gives a more complete picture of the return generated by a stock. In the case of SSY Group, it has a TSR of -42% over the last 3 years. This exceeds the performance of its share price that we mentioned earlier. This is largely the result of its dividend payments!

A different perspective

It is pleasing to see that SSY Group shareholders have received a total shareholder return of 8.2% over the past year. And that includes the dividend. As the one-year TSR is better than the five-year TSR (the latter standing at 0.8% per year), it seems that the stock’s performance has improved lately. At best, this may hint at genuine trading momentum, implying that now could be a great time to dig deeper. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. For example, we have identified 1 warning sign for the SSY group of which you should be aware.

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 average market-weighted returns of stocks currently trading on HK exchanges.

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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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