The Ningbo Techmation Co.,Ltd. (SHSE:603015) share price has had a bad week, falling 11%. On the other hand the share price is higher than it was three years ago. Arguably you'd have been better off buying an index fund, because the gain of 21% in three years isn't amazing.
In light of the stock dropping 11% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.
Check out our latest analysis for Ningbo TechmationLtd
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 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, Ningbo TechmationLtd achieved compound earnings per share growth of 35% per year. The average annual share price increase of 7% is actually lower than the EPS growth. Therefore, it seems the market has moderated its expectations for growth, somewhat. Of course, with a P/E ratio of 54.95, the market remains optimistic.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on Ningbo TechmationLtd's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Ningbo TechmationLtd's TSR for the last 3 years was 25%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that Ningbo TechmationLtd has rewarded shareholders with a total shareholder return of 23% in the last twelve months. That's including the dividend. That certainly beats the loss of about 1.0% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Ningbo TechmationLtd better, we need to consider many other factors. Even so, be aware that Ningbo TechmationLtd is showing 2 warning signs in our investment analysis , you should know about...
We will like Ningbo TechmationLtd better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.