Those Who Purchased Golden Wheel Tiandi Holdings (HKG:1232) Shares Five Years Ago Have A 31% Loss To Show For It

For many, the main point of investing is to generate higher returns than the overall market. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in Golden Wheel Tiandi Holdings Company Limited (HKG:1232), since the last five years saw the share price fall 31%. And some of the more recent buyers are probably worried, too, with the stock falling 30% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 17% in thirty days.

View our latest analysis for Golden Wheel Tiandi Holdings

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 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, Golden Wheel Tiandi Holdings's earnings per share (EPS) dropped by 0.6% each year. This reduction in EPS is less than the 7.2% annual reduction in the share price. So it seems the market was too confident about the business, in the past. The low P/E ratio of 2.63 further reflects this reticence.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on Golden Wheel Tiandi Holdings's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

We've already covered Golden Wheel Tiandi Holdings's share price action, but we should also mention its total shareholder return (TSR). 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 Golden Wheel Tiandi Holdings's TSR, which was a 15% drop over the last 5 years, was not as bad as the share price return.

A Different Perspective

We regret to report that Golden Wheel Tiandi Holdings shareholders are down 28% for the year. Unfortunately, that's worse than the broader market decline of 1.6%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3.1% over the last half decade. We realise that Buffett 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 Golden Wheel Tiandi Holdings better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Golden Wheel Tiandi Holdings (including 1 which is is concerning) .

There are plenty of other companies that have insiders buying up shares. You probably do 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.

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.

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. Thank you for reading.