Cortina Holdings Limited (SGX:C41) investors may be nervous after a 14% reduction in share price last quarter. Despite this short-term setback, the company has delivered impressive long-term returns over the past five years. The 263% gain throughout this period would undoubtedly satisfy most investors. Long-term performance is more important than short-term volatility when measuring a company’s quality. Business performance will determine the stock price’s future.
So, let’s see if the company’s fundamentals have driven its excellent long-term performance or if there are differences.
Markets can be efficient, but share prices don’t necessarily represent a company’s success. Comparing earnings per share (EPS) with share price changes can indicate how the market views a company.
Over the past five years, Cortina Holdings has managed to achieve an annual EPS growth rate of 28%. This growth rate is remarkably close to the annualized share price gain of 29% during the same period. This suggests that market sentiment has remained relatively stable over time, with the share price responding to changes in EPS.
The graphic below illustrates how EPS has evolved over time. You can click on the image to reveal the exact values.
While it’s encouraging that insiders have made significant purchases in the last year, most investors consider earnings and revenue growth trends to be more meaningful indicators of a company’s performance. We always recommend a thorough analysis of historical growth trends before making any investment decisions.
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Now, let’s discuss dividends. When evaluating investment returns, it’s essential to differentiate between total shareholder return (TSR) and share price return. TSR takes into account the value of cash dividends (assuming they were reinvested) and the calculated value of any discounted capital raisings and spin-offs.
TSR provides a more comprehensive view of returns, particularly for stocks that pay dividends. In the case of Cortina Holdings, its TSR over the last five years is an impressive 334%, surpassing the share price return mentioned earlier. Dividends have played a significant role in boosting the total shareholder return.
Looking at things from a different perspective, Cortina Holdings investors may be concerned about the 10% drop in share price over the past year, even when considering dividends. In contrast, the overall market has seen a 5.9% increase.
While even solid stocks can experience short-term declines, it’s crucial to assess fundamental business metrics for signs of long-term growth. On a more positive note, long-term shareholders have seen substantial gains, with an annual return of 34% over five years. The recent sell-off might present an opportunity, and a closer look at the company’s fundamental data can reveal signs of a long-term growth trend.
Monitoring share price performance over the long term is always enlightening, but understanding Cortina Holdings requires a comprehensive evaluation of various factors. Keep in mind that we’ve identified 1 warning sign for Cortina Holdings that you should be aware of.
Also, it’s worth noting that insiders aren’t the only ones buying Cortina Holdings shares. Take a look at this list of growing companies with insider buying.
Our Reader’s Queries
Who is the CEO of Cortina Holdings?
With over four decades of experience at Cortina Watch, Raymond Lim has played a pivotal role in the company’s growth and success. As one of the longest-serving employees, he has witnessed the transformation of Cortina Watch into one of the leading luxury timekeeping retailers in Asia. Lim shares his insights on the company’s journey and his vision for its future.
Who owns Cortina?
Despite being publicly listed, the Lim family still holds the reins of the company. The third generation has also recently joined the business, with Jeremy Lim, the younger son of Cortina founder Anthony Lim, playing a crucial role in management. Alongside his siblings Raymond and Sharon, Jeremy leads the business with finesse.
Is Cortina a watch brand?
Cortina Watch has been a leading brand in the world of high-quality timepieces for half a century. Known for their impeccable craftsmanship, their watches are highly sought after by those with a discerning taste.
What is the revenue of Cortina Watch?
The high-end watch retailer experienced a significant drop in net profit, with a decline of 18.5% for the half-year ending on September 30, 2023. The net profit fell from S$37.9 million to S$30.9 million compared to the previous year. Additionally, the revenue for the same period decreased by 3.8%, from S$406.9 million to S$391.3 million.