Health and Happiness (H&H) International Holdings Limited (HKG:1112) shareholders should be happy to see the share price up 19% in the last month. But that doesn't change the fact that the returns over the last five years have been less than pleasing. In fact, the share price is down 54%, which falls well short of the return you could get by buying an index fund.
On a more encouraging note the company has added HK$943m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.
View our latest analysis for Health and Happiness (H&H) International 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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the five years over which the share price declined, Health and Happiness (H&H) International Holdings' earnings per share (EPS) dropped by 25% each year. This fall in the EPS is worse than the 14% compound annual share price fall. The relatively muted share price reaction might be because the market expects the business to turn around.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
This free interactive report on Health and Happiness (H&H) International Holdings' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Health and Happiness (H&H) International Holdings the TSR over the last 5 years was -41%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Health and Happiness (H&H) International Holdings shareholders are down 1.8% for the year (even including dividends), but the market itself is up 36%. 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 7% 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 Health and Happiness (H&H) International Holdings better, we need to consider many other factors. Even so, be aware that Health and Happiness (H&H) International Holdings is showing 4 warning signs in our investment analysis , and 1 of those is a bit concerning...
If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.
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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.