Investors in Hutchison Telecommunications Hong Kong Holdings (HKG: 215) from three years ago are still down 21%, even after gaining 8.1% last week

In order to justify the effort of selecting individual stocks, it is worth striving to beat the returns of a market index fund. But in any portfolio, it is likely that some stocks will be below this benchmark. We regret to report that in the long term Hutchison Telecommunications Hong Kong Holdings Limited (HKG: 215) Shareholders had this experience, with the stock price falling 54% in three years, compared to a market return of around 16%. The declines have accelerated recently, with the stock price falling 10% in the past three months.

While the past three years have been difficult for shareholders of Hutchison Telecommunications Hong Kong Holdings, the past week has shown signs of promise. So let’s take a look at longer-term fundamentals and see if they’ve been driving negative returns.

Check out our latest review for Hutchison Telecommunications Hong Kong Holdings

To quote Buffett, “Ships will sail around the world but the Flat Earth Society will thrive. There will continue to be wide spreads between price and value in the market … ”By comparing earnings per share (EPS) and changes in stock prices over time, we can get a feel for the changes in investor attitudes towards a company over time.

Over five years of share price growth, Hutchison Telecommunications Hong Kong Holdings has gone from loss to profitability. This would generally be viewed as positive, so we’re surprised to see that the stock price is going down. It is therefore worth looking at other metrics to try to understand the evolution of the share price.

It is very likely that the fall in the dividend caused some investors to sell their shares, thus lowering the price. Declining income, at an annual rate of 20% over three years, could be seen as salt in the wound.

The company’s revenue and profits (over time) are shown in the image below (click to see exact numbers).

SEHK: 215 Profit and Revenue Growth November 4, 2021

It’s of course great to see how Hutchison Telecommunications Hong Kong Holdings has grown its profits over the years, but the future is more important to shareholders. Take a closer look at the financial health of Hutchison Telecommunications Hong Kong Holdings with this free report on its balance sheet.

What about dividends?

When considering investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. TSR is a yield calculation that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of any discounted capital increase and spinoff. So, for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. In the case of Hutchison Telecommunications Hong Kong Holdings, it has a TSR of -21% for the past 3 years. This exceeds the return on its share price that we mentioned earlier. This is largely the result of his dividend payments!

A different perspective

We are pleased to report that the shareholders of Hutchison Telecommunications Hong Kong Holdings achieved a total shareholder return of 39% over one year. Of course, this includes the dividend. In particular, the loss of the annualized five-year TSR of 0.3% per year compares very unfavorably with the recent evolution of the share price. We tend to place more emphasis on long-term performance than short-term performance, but the recent improvement could point to a (positive) inflection point within the company. It is always interesting to follow the evolution of stock prices over the long term. But to understand Hutchison Telecommunications Hong Kong Holdings better, there are many other factors to consider. Concrete example: we have spotted 3 warning signs for Hutchison Telecommunications Hong Kong Holdings you need to be aware of it, and one of them is a little rude.

If you like to buy 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 market-weighted average returns of stocks currently trading on the Hong Kong stock exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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