Long term investing works well, but it doesn't always work for each individual stock. It hits us in the gut when we see fellow investors suffer a loss. Anyone who held New World Development Company Limited (HKG:17) for five years would be nursing their metaphorical wounds since the share price dropped 81% in that time. And some of the more recent buyers are probably worried, too, with the stock falling 55% in the last year. Furthermore, it's down 22% in about a quarter. That's not much fun for holders. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Looking back five years, both New World Development's share price and EPS declined; the latter at a rate of 47% per year. This fall in the EPS is worse than the 28% compound annual share price fall. So the market may previously have expected a drop, or else it expects the situation will improve.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for New World Development the TSR over the last 5 years was -71%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
We regret to report that New World Development shareholders are down 48% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 7.5%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. We realise 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for New World Development (1 doesn't sit too well with us!) that you should be aware of before investing here.
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 Hong Kong 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.
長期投資はうまくいきますが、すべての個別株にとって必ずしもうまくいくわけではありません。仲間の投資家が損失を被るのを見ると、私たちは直感的に打撃を受けます。New World Development Company Limited (HKG:17) を5年間保有していた人は、その期間中の株価の81%の下落に悩まされることになります。より最近の上場の場合、株価は過去1年間で55%下落しています。さらには、約1クオーターで22%下落しています。保有者にとっては楽しくありません。このような状況にある株主の方たちに心から思いと感情を寄せます。分散化の重要性を強く再認識するとともに、お金以外にも人生にはまだまだ価値があることを忘れてはいけません。
株式に関して、その株価の上昇率だけでなく、総株主還元率も考慮することが重要です。TSRは、現金配当の価値(配当金を再投資した場合)と、割り引かれた資本調達やスピンオフの計算された価値を考慮したリターン計算です。配当金を支払う株式に対しては、TSRがより完全な株価の情報を提供すると言えます。New World Developmentについて言えるのは、過去5年間のTSRは-71%であり、上記の株価リターンよりも良好であることです。これは主にその配当支払いによるものです!
残念なことに、New World Developmentの株主は今年48%下落しています(配当を含む)。残念ながら、これは全般的な市場の7.5%の下落よりも悪い数字です。ただし、株価が広範な市場の動揺によって影響を受けた可能性があることもあります。資本市場の基本原則に目を向ける価値があるかもしれません。残念ながら、昨年のパフォーマンスは、株主が過去5年間で年平均11%の完全な損失を被っているという悪い流れの中で締めくくられています。バロン・ロートチャイルドは「街中に血が流れている時に買いなさい」と言ったことがあると思いますが、まず高品質なビジネスを買うことを確認してから買うことを勧めます。株価に市場環境が及ぼす影響を考慮することは十分に価値があることですが、はるかに重要なファクターがあります。例えば、当社がNew World Developmentについて3つの警告サインを発見したことがあります(1つは気になります!)。ここで投資する前に気を付ける必要があります。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。