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The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the last three years have been particularly tough on longer term Casablanca Group Limited (HKG:2223) shareholders. Regrettably, they have had to cope with a 67% drop in the share price over that period. The good news is that the stock is up 5.9% in the last week.
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View our latest analysis for Casablanca Group
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Casablanca Group became profitable within the last five years. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.
We think that the revenue decline over three years, at a rate of 5.1% per year, probably had some shareholders looking to sell. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
If you are thinking of buying or selling Casablanca Group stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While it's never nice to take a loss, Casablanca Group shareholders can take comfort that their trailing twelve month loss of 11% wasn't as bad as the market loss of around 14%. Given the total loss of 4.6% per year over five years, it seems returns have deteriorated in the last twelve months. Whilst Warren Buffett does say to 'buy when there is blood on the streets', buyers would need to examine the data carefully to be comfortable that the business itself is sound. Before deciding if you like the current share price, check how Casablanca Group scores on these 3 valuation metrics.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.