It’s easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Tak Lee Machinery Holdings Limited (HKG:8142) have tasted that bitter downside in the last year, as the share price dropped 20%. That’s disappointing when you consider the market returned -9.0%. Tak Lee Machinery Holdings may have better days ahead, of course; we’ve only looked at a one year period. And the share price decline continued over the last week, dropping some 8.2%. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the unfortunate twelve months during which the Tak Lee Machinery Holdings share price fell, it actually saw its earnings per share (EPS) improve by 127%. Of course, the situation might betray previous over-optimism about growth. It’s fair to say that the share price does not seem to be reflecting the EPS growth. So it’s easy to justify a look at some other metrics.
Tak Lee Machinery Holdings’s revenue is actually up 82% over the last year. Since we can’t easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Tak Lee Machinery Holdings shareholders are down 20% for the year, even worse than the market loss of 9.0%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. Putting aside the last twelve months, it’s good to see the share price has rebounded by 3.7%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it’s the start of a new trend. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
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.