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Did Changing Sentiment Drive Magnus Concordia Group's (HKG:1172) Share Price Down A Worrying 50%?

Simply Wall St

The nature of investing is that you win some, and you lose some. Anyone who held Magnus Concordia Group Limited (HKG:1172) over the last year knows what a loser feels like. The share price is down a hefty 50% in that time. Notably, shareholders had a tough run over the longer term, too, with a drop of 42% in the last three years. Shareholders have had an even rougher run lately, with the share price down 10% in the last 90 days.

See our latest analysis for Magnus Concordia Group

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 unfortunate twelve months during which the Magnus Concordia Group share price fell, it actually saw its earnings per share (EPS) improve by 83%. Of course, the situation might betray previous over-optimism about growth.

It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's well worth checking out some other metrics, too.

Magnus Concordia Group's revenue is actually up 50% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

SEHK:1172 Income Statement, February 17th 2020

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Magnus Concordia Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Magnus Concordia Group's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for Magnus Concordia Group shareholders, and that cash payout explains why its total shareholder loss of 50%, over the last year, isn't as bad as the share price return.

A Different Perspective

Magnus Concordia Group shareholders are down 50% for the year, but the market itself is up 0.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 3.2% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 4 warning signs for Magnus Concordia Group (1 shouldn't be ignored) that you should be aware of.

Magnus Concordia Group is not the only stock that insiders are buying. 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.