Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the Realord Group Holdings Limited (HKG:1196) share price slid 38% over twelve months. That's disappointing when you consider the market returned 12%. On the bright side, the stock is actually up 32% in the last three years. But it's up 5.7% in the last week.

On a more encouraging note the company has added HK$447m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

See our latest analysis for Realord Group Holdings

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Unfortunately Realord Group Holdings reported an EPS drop of 11% for the last year. This reduction in EPS is not as bad as the 38% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. Having said that, the market is still optimistic, given the P/E ratio of 73.33.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It might be well worthwhile taking a look at our free report on Realord Group Holdings' earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 12% in the last year, Realord Group Holdings shareholders lost 38%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Realord Group Holdings better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Realord Group Holdings (of which 1 is a bit concerning!) you should know about.

But note: Realord Group Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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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.