Did Changing Sentiment Drive HG Metal Manufacturing's (SGX:BTG) Share Price Down A Painful 72%?
Generally speaking long term investing is the way to go. But unfortunately, some companies simply don't succeed. Zooming in on an example, the HG Metal Manufacturing Limited (SGX:BTG) share price dropped 72% in the last half decade. That is extremely sub-optimal, to say the least. And it's not just long term holders hurting, because the stock is down 26% in the last year. Furthermore, it's down 20% in about a quarter. That's not much fun for holders. Of course, this share price action may well have been influenced by the 21% decline in the broader market, throughout the period.
View our latest analysis for HG Metal Manufacturing
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During five years of share price growth, HG Metal Manufacturing moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.
Revenue is actually up 1.0% over the time period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling HG Metal Manufacturing stock, you should check out this FREE detailed report on its balance sheet.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between HG Metal Manufacturing's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that HG Metal Manufacturing's TSR, which was a 65% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
While the broader market lost about 19% in the twelve months, HG Metal Manufacturing shareholders did even worse, losing 26%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 19% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand HG Metal Manufacturing better, we need to consider many other factors. For instance, we've identified 3 warning signs for HG Metal Manufacturing that you should be aware of.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SG exchanges.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.
