Ideally, your overall portfolio should beat the market average. But every investor is virtually certain to have both over-performing and under-performing stocks. So we wouldn’t blame the long term Hongkong Land Holdings Limited (SGX:H78) shareholders for doubting their decision to hold, with the stock down 44% over a half decade.

Given the past week has been tough on shareholders, let’s investigate the fundamentals and see what we can learn.

Check out our latest analysis for Hongkong Land Holdings

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will thrive. 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.

Hongkong Land Holdings became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.

We note that the dividend has remained healthy, so that wouldn’t really explain the share price drop. It’s not immediately clear to us why the stock price is down but further research might provide some answers.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Hongkong Land Holdings is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking this out free report showing consensus forecasts

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, Hongkong Land Holdings’ TSR for the last 5 years was -29%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

Story continues

A Different Perspective

Hongkong Land Holdings shareholders are down 14% for the year (even including dividends), but the market itself is up 1.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualized loss of 5% over the last half decade. We realize 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 price share performance over the longer term. But to understand Hongkong Land Holdings better, we need to consider many other factors. Case in point: We’ve spotted 2 warning signs for Hongkong Land Holdings you should be aware of.

We will like Hongkong Land Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that are currently traded on Singaporean exchanges.

Have feedback on this article? Concerned about the content? get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift Card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here