Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Kingland Group Holdings Limited (HKG:1751) share price slid 46% over twelve months. That's disappointing when you consider the market returned 0.9%. Because Kingland Group Holdings hasn't been listed for many years, the market is still learning about how the business performs. On top of that, the share price has dropped a further 17% in a month.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 Kingland Group Holdings reported an EPS drop of 76% for the last year. This fall in the EPS is significantly worse than the 46% the share price fall. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into Kingland Group Holdings's key metrics by checking this interactive graph of Kingland Group Holdings's earnings, revenue and cash flow.
A Different Perspective
Given that the market gained 0.9% in the last year, Kingland Group Holdings shareholders might be miffed that they lost 46%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 13%, 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 deciding if you like the current share price, check how Kingland Group Holdings scores on these 3 valuation metrics.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.