In order to justify the effort of picking individual stocks, it is worth striving to beat the returns of an index fund. But in any portfolio, some stocks are likely to fall below this benchmark. Unfortunately, this has been the case for longer CLP Holdings Limited (HKG:2) shareholders, as the stock price has fallen 13% over the past three years, well below the market decline of around 10%.
With that in mind, it’s worth looking at whether the company’s underlying fundamentals have been driving long-term performance, or if there are any gaps.
Check out our latest analysis for CLP Holdings
It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. By comparing earnings per share (EPS) and share price changes over time, we can get an idea of how investors’ attitudes toward a company change over time.
CLP Holdings has seen its EPS decline at a compound rate of 14% per year, over the past three years. This drop in EPS is worse than the compound annual drop of 4% in the share price. So, despite the earlier disappointment, shareholders should be certain that the situation will improve in the longer term.
The image below shows how EPS has tracked over time (if you click on the image you can see more details).
Dive deeper into key CLP Holdings metrics with this interactive chart of CLP Holdings 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 performance. While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. Arguably, TSR gives a more complete picture of the return generated by a stock. In the case of CLP Holdings, it shows a TSR of -2.0% over the last 3 years. This exceeds the performance of its share price that we mentioned earlier. This is largely the result of its dividend payments!
A different perspective
It’s nice to see that CLP Holdings shareholders have received a total shareholder return of 13% over the past year. And that includes the dividend. As the one-year TSR is better than the five-year TSR (the latter standing at 5% per year), it seems that the stock’s performance has improved lately. Given that the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. Before spending more time on CLP Holdings, it might be a good idea to click here to see if any insiders have been buying or selling stocks.
But note: CLP Holdings may not be the best stock to buy. So take a look at this free list of interesting companies with past earnings growth (and new growth forecasts).
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on HK exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.