Investors in Roiserv Lifestyle Services (HKG:2146) have unfortunately lost 79% over the last year

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Even the best investor on earth makes unsuccessful investments. But serious investors should think long and hard about avoiding extreme losses. So spare a thought for the long term shareholders of Roiserv Lifestyle Services Co., Ltd. (HKG:2146); the share price is down a whopping 82% in the last twelve months. That’d be enough to make even the strongest stomachs churn. We wouldn’t rush to judgement on Roiserv Lifestyle Services because we don’t have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 46% in the last 90 days. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report. While a drop like that is definitely a body blow, money isn’t as important as health and happiness.

So let’s have a look and see if the longer term performance of the company has been in line with the underlying business’ progress.

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

Unhappily, Roiserv Lifestyle Services had to report a 28% decline in EPS over the last year. This reduction in EPS is not as bad as the 82% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 1.65.

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

earnings-per-share-growth
SEHK:2146 Earnings Per Share Growth October 10th 2022

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Roiserv Lifestyle Services’ TSR for the last 1 year was -79%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Roiserv Lifestyle Services shareholders are down 79% for the year (even including dividends), even worse than the market loss of 25%. There’s no doubt that’s a disappointment, but the stock may well have fared better in a stronger market. With the stock down 46% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. It’s always interesting to track share price performance over the longer term. But to understand Roiserv Lifestyle Services better, we need to consider many other factors. Take risks, for example – Roiserv Lifestyle Services has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

Of course Roiserv Lifestyle Services may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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

Valuation is complex, but we’re helping make it simple.

Find out whether Roiserv Lifestyle Services is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis


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