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Imagine Owning G & M Holdings (HKG:6038) And Wondering If The 32% Share Price Slide Is Justified

Simply Wall St

This week we saw the G & M Holdings Limited (HKG:6038) share price climb by 16%. But in truth the last year hasn't been good for the share price. In fact, the price has declined 32% in a year, falling short of the returns you could get by investing in an index fund.

View our latest analysis for G & M Holdings

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.

Unfortunately G & M Holdings reported an EPS drop of 30% for the last year. This proportional reduction in earnings per share isn't far from the 32% decrease in the share price. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price is remains a similar multiple of the EPS, suggesting the outlook remains the same.

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

SEHK:6038 Past and Future Earnings, November 24th 2019

It might be well worthwhile taking a look at our free report on G & M Holdings's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, G & M Holdings's TSR for the last year was -28%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While G & M Holdings shareholders are down 28% for the year (even including dividends) , the market itself is up 2.8%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 5.7% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. Before forming an opinion on G & M Holdings you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.