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Should DaChan Food (Asia) (HKG:3999) Be Disappointed With Their 72% Profit?

It's been a soft week for DaChan Food (Asia) Limited (HKG:3999) shares, which are down 11%. But looking back over the last year, the returns have actually been rather pleasing! After all, the share price is up a market-beating 72% in that time.

Check out our latest analysis for DaChan Food (Asia)

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 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 last year, DaChan Food (Asia) actually saw its earnings per share drop 15%.

This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

Revenue was pretty flat year on year, but maybe a closer look at the data can explain the market optimism.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

SEHK:3999 Income Statement, January 24th 2020
SEHK:3999 Income Statement, January 24th 2020

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

It's good to see that DaChan Food (Asia) has rewarded shareholders with a total shareholder return of 72% in the last twelve months. That certainly beats the loss of about 6.5% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand DaChan Food (Asia) better, we need to consider many other factors. For example, we've discovered 4 warning signs for DaChan Food (Asia) that you should be aware of before investing here.

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

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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