China Everbright Environment Group (HKG:257) cuts HK$1.5 billion as corporate profits and investor returns have been declining for the past five years

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We believe that wise long-term investing is the way to go. But no one is immune from overbuying at a high price. for example, China Guangguang Environmental Group Co., Ltd. (HKG:257) The share price has fallen 67% in five years. I certainly feel sorry for shareholders who bought near the peak. We also note that the stock has performed poorly over the last year, with the stock price down 31%. And the stock price continued to decline last week, dropping about 9.1%. However, this may be related to the soft market, which declined by approximately 5.0% during the same period.

With the share price down 9.1% over the past week, it’s worth looking at the company’s performance and looking for any warning signs.

Check out our latest analysis for China Light Environment Group.

In Buffett’s words, “Ships will sail around the world, but a flat-earther society will thrive.” There will continue to be a wide discrepancy between prices and market values. ..” By comparing earnings per share (EPS) and share price changes over time, we can see how investor attitudes to a company have changed over time.

Looking back over five years, China Everbright Environment Group’s share price and EPS both fell. The latter has an annual interest rate of 3.1%. This decline in EPS is less than the 20% annual decline in the share price. So it seems like the market used to have too much confidence in this business. The low P/E ratio of 3.34 further reflects this reluctance.

You can see below how EPS has changed over time (unveil the exact values ​​by clicking on the image).

SEHK:257 Earnings per share growth (as of January 21, 2024)

Learn more about China Everbright Environmental Group’s key metrics by exploring this interactive graph of China Everbright Environmental Group’s earnings, revenue and cash flow.

What will happen to the dividend?

It’s important to consider not only the share price return, but also the total shareholder return for a particular 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 increases and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. For China Guangguang Environmental Group, the TSR for the last 5 years was -55%. This exceeds the stock return mentioned earlier. And there’s no kudos to speculating that dividend payments are the main explanation for the divergence.

different perspective

While the overall market lost around 21% over the 12-month period, China Everbright Environmental Group’s shareholders suffered an even worse loss, losing 26% (even including dividends). However, it is also possible that the stock price is simply being affected by broader market fluctuations. It might be worth looking at the basics in case a good opportunity presents itself. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the 9% annualized loss over the past five years. Generally speaking, long-term stock price weakness can be a bad sign, but contrarian investors may want to research the stock in hopes of a turnaround. I think it’s very interesting to look at stock price over the long term as an indicator of business performance. But to really gain insight, you need to consider other information as well. For example, we identified 2 warning signs for China Light Environment Group (Note that 1 is a little worrying).

However, please note: China Guangguang Environmental Group may not be the best stock to buy.So take a look at this free A list of interesting companies that have grown their earnings in the past (and are predicted to grow in the future).

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

Valuation is complex, but we help make it simple.

Check out our comprehensive analysis of whether China Guangguang Environmental Group is potentially overvalued or undervalued. Fair value estimates, risks and caveats, dividends, insider trading, and financial health.

See free analysis

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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