If You Had Bought China Pioneer Pharma Holdings (HKG:1345) Stock Five Years Ago, You'd Be Sitting On A 84% Loss, Today
It is doubtless a positive to see that the China Pioneer Pharma Holdings Limited (HKG:1345) share price has gained some 60% in the last three months. But will that repair the damage for the weary investors who have owned this stock as it declined over half a decade? Probably not. Five years have seen the share price descend precipitously, down a full 84%. It's true that the recent bounce could signal the company is turning over a new leaf, but we are not so sure. The fundamental business performance will ultimately determine if the turnaround can be sustained.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
View our latest analysis for China Pioneer Pharma Holdings
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Looking back five years, both China Pioneer Pharma Holdings's share price and EPS declined; the latter at a rate of 25% per year. This change in EPS is reasonably close to the 31% average annual decrease in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Rather, the share price has approximately tracked EPS growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into China Pioneer Pharma Holdings's key metrics by checking this interactive graph of China Pioneer Pharma Holdings's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between China Pioneer Pharma Holdings's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. China Pioneer Pharma Holdings's TSR of was a loss of 81% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
While the broader market gained around 3.0% in the last year, China Pioneer Pharma Holdings shareholders lost 3.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 28% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand China Pioneer Pharma Holdings better, we need to consider many other factors. Take risks, for example - China Pioneer Pharma Holdings has 3 warning signs (and 1 which can't be ignored) we think you should know about.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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