Oriental Enterprise Holdings’ (HKG:18) earnings and shareholder returns have been trending downwards over the past five years, yet the share price rose 21% last week.

Oriental Enterprise Holdings Limited (HKG:18) Shareholders should be happy that the share price rose 21% last week. But if you look back over the past five years, the returns haven’t been great. In fact, the share price is down 46%, nowhere near the return you’d get from buying an index fund.

The recent 21% gain could be a positive sign for the future, so let’s take a look at historical fundamentals.

See our latest analysis for Oriental Enterprise Holdings

To paraphrase Benjamin Graham, “In the short run, the market is a voting machine, but in the long run it’s a weighing machine.” One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the five years that the share price was declining, Oriental Enterprise Holdings’ earnings per share (EPS) fell by 1.6% per year. Readers should note that the share price fell faster than the EPS during this period, at 12% per year, suggesting that the market was previously too optimistic about the stock.

The chart below depicts how EPS has changed over time (unveil the exact values ​​by clicking on the image).

this free This interactive report on Oriental Enterprise Holdings’ earnings, revenue and cash flow is a great starting point, if you want to investigate the stock further.

What about dividends?

When looking at investment returns, it’s important to consider the following differences: Total shareholder return (TSR) and Stock returnThe TSR incorporates the value of any spin-offs or discounted capital raisings, as well as dividends, based on the assumption that the dividends are reinvested. As such, for companies that pay a generous dividend, the TSR will often be a lot higher than the share price return. Coincidentally, for Oriental Enterprise Holdings, the TSR for the last 5 years was -21%, which exceeds the share price return mentioned above. This is mainly as a result of the dividend payments.

A different perspective

Oriental Enterprise Holdings investors have had a tough year this year. They lost a total of 27% including dividends, while the market rose about 7.3%. But remember that even the best stocks can underperform the market over a twelve month period. Unfortunately, last year’s performance capped off a bad run, with shareholders facing an annualized loss of 4% over five years. I know Baron Rothschild said investors should “buy when the blood is flowing”, but I would caution that investors should first make sure they are buying a quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to gain real insight, other information needs to be considered. For example, Oriental Enterprise Holdings is taking on risk. Two warning signs (And one thing that worries me a bit) I think you should know about this.

If you like buying stocks with management teams, you might like this free A list of companies. (Hint: many of these are under the radar and have attractive valuations.)

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.

Have feedback about this article? Concerns about the content? contact Please contact us directly. Or email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

Have feedback about this article? Concerns about the content? Contact us directly. Or email us at editorial-team@simplywallst.com