When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. One great example is Shanghai Sinyang Semiconductor Materials Co., Ltd. (SZSE:300236) which saw its share price drive 184% higher over five years. In the last week shares have slid back 4.2%.
Although Shanghai Sinyang Semiconductor Materials has shed CN¥480m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
See our latest analysis for Shanghai Sinyang Semiconductor Materials
There is no denying that markets are sometimes efficient, but prices do not always reflect 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 the last half decade, Shanghai Sinyang Semiconductor Materials became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Shanghai Sinyang Semiconductor Materials has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Shanghai Sinyang Semiconductor Materials will grow revenue in the future.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. As it happens, Shanghai Sinyang Semiconductor Materials' TSR for the last 5 years was 189%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It's nice to see that Shanghai Sinyang Semiconductor Materials shareholders have received a total shareholder return of 21% over the last year. That's including the dividend. However, that falls short of the 24% TSR per annum it has made for shareholders, each year, over five years. Before deciding if you like the current share price, check how Shanghai Sinyang Semiconductor Materials scores on these 3 valuation metrics.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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.