Time Watch Investments (HKG:2033) stock fell 10% last week as three-year earnings and shareholder returns continue their downward trend
Many investors define a successful investment as beating the market average over the long term. But it’s virtually certain that sometimes you’ll buy stocks that are below average market returns. Unfortunately, this has been the case for longer Time Watch Investments Limited (HKG:2033) shareholders, as the stock price has fallen 46% over the past three years, well below the market decline of around 12%. The most recent news is not reassuring, the share price having fallen by 25% in one year. The falls have accelerated recently, with the stock price falling 24% in the past three months.
Looking back to the past week, investor sentiment for Time Watch Investments is not positive, so let’s see if there is a mismatch between the fundamentals and the stock price.
Check out our latest analysis for Time Watch Investments
It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. An imperfect but simple way to examine how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.
Time Watch Investments has seen its EPS decline at a compound rate of 3.7% per year, over the past three years. The 19% decline in share price is actually more pronounced than the slippage in EPS. So it seems that the market was overconfident in the company in the past. The less favorable sentiment is reflected in its current P/E ratio of 4.88.
You can see below how the EPS has evolved over time (find out the exact values by clicking on the image).
Dive deeper into key Time Watch Investments metrics by viewing this interactive graph of Time Watch Investments earnings, revenue, and cash flow.
What about the Total Shareholder Return (TSR)?
Investors should note that there is a difference between Time Watch Investments’ total shareholder return (TSR) and the change in its share price, which we’ve covered above. Arguably, TSR is a more comprehensive return calculation as it takes into account the value of dividends (as if reinvested), as well as the hypothetical value of any discounted capital that has been offered to shareholders. Time Watch Investments’ TSR is down 43% over 3 years. It wasn’t as bad as its stock price performance, as it paid dividends.
A different perspective
While the broader market lost around 14% in the twelve months, Time Watch Investments shareholders fared even worse, losing 25%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. Unfortunately, last year’s performance capped a bad patch, with shareholders facing a total loss of 3% per year over five years. Generally speaking, long-term stock price weakness can be a bad sign, although contrarian investors may want to seek out the stock in hopes of a turnaround. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. To do this, you need to find out about the 2 warning signs we spotted with Time Watch Investments (including 1 that is significant).
If you like buying stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).
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.