Investors Who Bought Goldpac Group (HKG:3315) Shares Five Years Ago Are Now Down 74%
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Statistically speaking, long term investing is a profitable endeavour. But no-one is immune from buying too high. For example the Goldpac Group Limited (HKG:3315) share price dropped 74% over five years. That's not a lot of fun for true believers. The falls have accelerated recently, with the share price down 15% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 6.9% in the same timeframe.
See our latest analysis for Goldpac Group
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 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 five years over which the share price declined, Goldpac Group's earnings per share (EPS) dropped by 4.3% each year. Readers should note that the share price has fallen faster than the EPS, at a rate of 24% per year, over the period. This implies that the market was previously too optimistic about the stock. The less favorable sentiment is reflected in its current P/E ratio of 8.07.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on Goldpac Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Goldpac Group the TSR over the last 5 years was -64%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It's nice to see that Goldpac Group shareholders have received a total shareholder return of 10.0% over the last year. Of course, that includes the dividend. There's no doubt those recent returns are much better than the TSR loss of 19% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. Importantly, we haven't analysed Goldpac Group's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.
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 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. Thank you for reading.
