The 43% return for shareholders of Chongqing Machinery & Electric (HKG: 2722) even lagged behind year-over-year earnings growth
It’s easy to buy an index fund these days and your return should be in line with the market (roughly). But more can be achieved by choosing stocks that are above average (as part of a diversified portfolio). For example the Chongqing Machinery & Electric Co., Ltd. (HKG: 2722) The share price has risen by 39% in the last 1 year and has thus clearly exceeded the market return of around 12% (excluding dividends). If it can sustain that outperformance over the long term, investors will do very well! That said, the longer-term returns aren’t all that impressive, as the stock gained only 8.8% in three years.
Since the stock increased its market capitalization by $ 295 million in the past week alone.
Check out our latest analysis for Chongqing Machinery & Electric
While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just the underlying business performance. One way to study how market sentiment has changed over time is to examine the interaction between a company’s stock price and its earnings per share (EPS).
Chongqing Machinery & Electric has increased EPS by 54% over the past twelve months. It can be said that the price gain of 39% could not keep pace with the EPS growth. So it seems that the market for Chongqing Machinery & Electric has cooled off despite the growth. Interesting. The caution is also evident in the low PER of 9.00.
In the image below you can see how the EPS has changed over time (click on the graph to see the exact values).
We are happy to announce that the CEO is paid more modestly than most CEOs at similarly capitalized companies. It’s always worth keeping an eye on CEO salaries, but a more important question is whether the company will grow its bottom line over the years. this for free Chongqing Machinery & Electric’s interactive earnings, sales, and cash flow report is a great place to start if you want to explore the stock further.
What about dividends?
In addition to measuring stock price return, investors should also consider total shareholder return (TSR). While the stock price return only reflects the change in the stock price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of discounted capital raising or spin-off. For companies that pay a generous dividend, the TSR is often much higher than the stock price return. In the case of Chongqing Machinery & Electric, it has a TSR of 43% for the past year. That exceeds the already mentioned share price return. This is mainly due to its dividend payments!
We are pleased to announce that Chongqing Machinery & Electric shareholders have achieved a total return of 43% in one year. This also includes the dividend. That surely exceeds the loss of around 3% per year in the last half a decade. In general, we put more emphasis on long-term performance in the short term, but the recent improvement could indicate a (positive) turning point within the company. While it is worth considering the varying effects of market conditions on the stock price, there are other factors that are even more important. Like risks, for example. Every company has them and we discovered them 3 warning signs for Chongqing Machinery & Electric (2 of which are potentially serious!) that you should know about.
Naturally, You could find a fantastic investment by looking elsewhere. So check this out for free List of companies that we expect will increase their profits.
Please note that the market returns reported in this article reflect the market weighted average returns on stocks currently traded on HK exchanges.
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This article from Simply Wall St is of a general nature. We only provide comments based on historical data and analyst projections using an unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
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