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While not a mind-blowing move, it is good to see that the Wisdom Education International Holdings Company Limited (HKG:6068) share price has gained 28% in the last three months. But that doesn't change the fact that the returns over the last year have been less than pleasing. After all, the share price is down 38% in the last year, significantly under-performing the market.
See our latest analysis for Wisdom Education International Holdings
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the unfortunate twelve months during which the Wisdom Education International Holdings share price fell, it actually saw its earnings per share (EPS) improve by 38%. Of course, the situation might betray previous over-optimism about growth. The divergence between the EPS and the share price is quite notable, during the year. But we might find some different metrics explain the share price movements better.
Wisdom Education International Holdings managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling Wisdom Education International Holdings stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
We doubt Wisdom Education International Holdings shareholders are happy with the loss of 36% over twelve months (even including dividends). That falls short of the market, which lost 6.5%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. Putting aside the last twelve months, it's good to see the share price has rebounded by 28%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.