Bank Earnings

Bank of Zhengzhou (HKG:6196) loses 413 million Canadian yen, corporate earnings and investor returns trend lower over past five years

Generally speaking, long-term investing is the way to go. But along the way, some stocks will perform poorly. For example the Zhengzhou Bank Co., Ltd. (HKG:6196) the stock price has fallen 64% in five years. It’s extremely sub-optimal, to say the least. The falls have accelerated recently, with the stock price falling 16% in the past three months. Of course, this stock price move may well have been influenced by the 15% decline in the broader market throughout the period.

Looking back to the past week, investor sentiment for Bank of Zhengzhou is not positive, so let’s see if there is a mismatch between the fundamentals and the stock price.

See our latest analysis for Bank of Zhengzhou

In his test The Graham-and-Doddsville super-investors Warren Buffett has described how stock prices don’t always rationally reflect a company’s value. 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.

Looking back five years, Bank of Zhengzhou’s share price and EPS both declined; the latter at a rate of 9.0% per annum. This EPS reduction is less than the 18% annual reduction in share price. This implies that the market was previously too bullish on the stock. The low P/E ratio of 3.75 further reflects this reluctance.

The graph below illustrates the evolution of EPS over time (reveal the exact values ​​by clicking on the image).

SEHK: 6196 Earnings per share growth May 17, 2022

We appreciate that insiders have been buying stocks over the past twelve months. That said, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be interesting to take a look at our free Bank of Zhengzhou earnings, revenue and cash flow report.

What about the Total Shareholder Return (TSR)?

We would be remiss not to mention the difference between Bank of Zhengzhou total shareholder return (TSR) and its share price performance. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. Dividends have been really good for Bank of Zhengzhou shareholders, and this cash payout explains why its shareholders’ total loss of 59% over the past 5 years isn’t as bad as the stock price return. ‘stock.

A different perspective

While it’s never nice to take a loss, Bank of Zhengzhou shareholders can rest assured that their 18% year-over-year loss was not nearly as bad as the market’s loss of around 23%. Unfortunately, last year’s performance may indicate unresolved challenges, given that it is worse than the 10% annualized loss over the past half-decade. As Baron Rothschild tells the investor to “buy when there’s blood in the streets, even if the blood is yours”, buyers should carefully examine the data to be sure the company itself is sound. . It is always interesting to follow the evolution of the share price over the long term. But to better understand Bank of Zhengzhou, we need to consider many other factors. For example, we found 2 warning signs for Bank of Zhengzhou which you should be aware of before investing here.

Bank of Zhengzhou isn’t the only stock insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on HK exchanges.

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.