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Did You Manage To Avoid JNBY Design's (HKG:3306) Painful 59% Share Price Drop?

Simply Wall St

The nature of investing is that you win some, and you lose some. And there's no doubt that JNBY Design Limited (HKG:3306) stock has had a really bad year. In that relatively short period, the share price has plunged 59%. On the bright side, the stock is actually up 3.2% in the last three years. The falls have accelerated recently, with the share price down 37% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

See our latest analysis for JNBY Design

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.

Even though the JNBY Design share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.

It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.

JNBY Design's revenue is actually up 7.1% 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 image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

SEHK:3306 Income Statement March 27th 2020

We know that JNBY Design has improved its bottom line lately, but what does the future have in store? So we recommend checking out this free report showing consensus forecasts

What about the Total Shareholder Return (TSR)?

We've already covered JNBY Design's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that JNBY Design's TSR, which was a 56% drop over the last year, was not as bad as the share price return.

A Different Perspective

JNBY Design shareholders are down 56% for the year, falling short of the market return. The market shed around 17%, no doubt weighing on the stock price. Investors are up over three years, booking 6.9% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for JNBY Design you should be aware of.

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.