NetEase (NASDAQ:NTES) shareholders have earned a 24% CAGR over the last three years

NetEase, Inc. (NASDAQ:NTES) shareholders have seen the share price rise 79% over three years, well in excess of the market return (48%, not including dividends).

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.

During three years of share price growth, NetEase achieved compound earnings per share growth of 26% per year. This EPS growth is higher than the 21% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.

What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of NetEase, it has a TSR of 89% for the last 3 years. That exceeds the share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective
We regret to report that NetEase shareholders are down 9.9% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 1.1%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 14% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend.

If you wish to leverage on this consider using DLCs
$NTES-S(09999.HK)$
5x short $NetEase 5xShortSG230330(DHAW.SG)$
5x long $NetEase 5xLongSG230329(DULW.SG)$