Some stocks are best avoided. It hits us in the gut when we see fellow investors suffer a loss. Spare a thought for those who held Yuexiu Real Estate Investment Trust (HKG:405) for five whole years - as the share price tanked 82%. And we doubt long term believers are the only worried holders, since the stock price has declined 54% over the last twelve months. On the other hand the share price has bounced 9.2% over the last week. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

While the stock has risen 9.2% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During five years of share price growth, Yuexiu Real Estate Investment Trust moved from a loss to profitability. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.

The most recent dividend was actually lower than it was in the past, so that may have sent the share price lower. The revenue decline of 0.6% per year wouldn't have helped. So it seems weak revenue and dividend trends may have influenced the share price.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We know that Yuexiu Real Estate Investment Trust has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Yuexiu Real Estate Investment Trust

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. We note that for Yuexiu Real Estate Investment Trust the TSR over the last 5 years was -74%, 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 Yuexiu Real Estate Investment Trust shareholders are down 51% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 4.2%. 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 12% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Take risks, for example - Yuexiu Real Estate Investment Trust has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

Of course Yuexiu Real Estate Investment Trust may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.