Some Smart-Core Holdings (HKG:2166) Shareholders Are Down 29%

Many investors define successful investing as beating the market average over the long term. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Smart-Core Holdings Limited (HKG:2166) shareholders have had that experience, with the share price dropping 29% in three years, versus a market return of about 13%. And the ride hasn't got any smoother in recent times over the last year, with the price 26% lower in that time.

Check out our latest analysis for Smart-Core Holdings

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Smart-Core Holdings saw its EPS decline at a compound rate of 5.9% per year, over the last three years. The share price decline of 11% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 9.30.

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

It might be well worthwhile taking a look at our free report on Smart-Core Holdings's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Smart-Core Holdings's TSR for the last 3 years was -23%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

The last twelve months weren't great for Smart-Core Holdings shares, which performed worse than the market, costing holders 23% , including dividends . Meanwhile, the broader market slid about 4.1%, likely weighing on the stock. The three-year loss of 8.4% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Smart-Core Holdings better, we need to consider many other factors. Be aware that Smart-Core Holdings is showing 4 warning signs in our investment analysis , and 2 of those can't be ignored...

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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.