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Even the best investor on earth makes unsuccessful investments. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. We wouldn't blame Tong Kee (Holding) Limited (HKG:8305) shareholders if they were still in shock after the stock dropped like a lead balloon, down 72% in just one year. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. Tong Kee (Holding) may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 38% in about a quarter. That's not much fun for holders.
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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the unfortunate twelve months during which the Tong Kee (Holding) share price fell, it actually saw its earnings per share (EPS) improve by 87%. It's quite possible that growth expectations may have been unreasonable in the past. 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.
Tong Kee (Holding)'s revenue is actually up 22% 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.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at Tong Kee (Holding)'s financial health with this free report on its balance sheet.
A Different Perspective
Tong Kee (Holding) shareholders are down 72% for the year, even worse than the market loss of 1.4%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 38%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Before forming an opinion on Tong Kee (Holding) you might want to consider these 3 valuation metrics.
But note: Tong Kee (Holding) may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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 email@example.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.