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Did Changing Sentiment Drive Shun Wo Group Holdings's (HKG:1591) Share Price Down A Painful 74%?

Simply Wall St

It's not possible to invest over long periods without making some bad investments. But really big losses can really drag down an overall portfolio. So spare a thought for the long term shareholders of Shun Wo Group Holdings Limited (HKG:1591); the share price is down a whopping 74% in the last three years. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. The more recent news is of little comfort, with the share price down 60% in a year. Shareholders have had an even rougher run lately, with the share price down 34% in the last 90 days.

View our latest analysis for Shun Wo Group 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. 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.

Over the three years that the share price declined, Shun Wo Group Holdings's earnings per share (EPS) dropped significantly, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. But it's safe to say we'd generally expect the share price to be lower as a result!

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

SEHK:1591 Past and Future Earnings, September 25th 2019

Dive deeper into Shun Wo Group Holdings's key metrics by checking this interactive graph of Shun Wo Group Holdings's earnings, revenue and cash flow.


A Different Perspective

The last twelve months weren't great for Shun Wo Group Holdings shares, which performed worse than the market, costing holders 60%. Meanwhile, the broader market slid about 5.5%, likely weighing on the stock. The three-year loss of 36% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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

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.

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. Thank you for reading.