Fu Shou Yuan International Group Limited (HKG:1448) shareholders should be happy to see the share price up 11% in the last month.    It's not great that the stock is down over the last three years.  But on the bright side, its return of -32%, is better than the market, which is down 29%.    

Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.  

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business.  One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the unfortunate three years of share price decline, Fu Shou Yuan International Group actually saw its earnings per share (EPS) improve by 17% per year.  Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain).  Alternatively, growth expectations may have been unreasonable in the past.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

Revenue is actually up 11% over the three years, so the share price drop doesn't seem to hinge on revenue, either.  It's probably worth investigating Fu Shou Yuan International Group further; while we may be missing something on this analysis, there might also be an opportunity.    

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

SEHK:1448 Earnings and Revenue Growth February 23rd 2024

We know that Fu Shou Yuan International Group has improved its bottom line lately, but what does the future have in store?  So we recommend checking out this free report showing consensus forecasts

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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, Fu Shou Yuan International Group's TSR for the last 3 years was -27%, 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

The total return of 9.9% received by Fu Shou Yuan International Group shareholders over the last year isn't far from the market return of -10%.    So last year was actually even worse than the last five years, which cost shareholders 3% per year.  Weak performance over the long term usually destroys market confidence in a stock, but bargain hunters may want to take a closer look for signs of a turnaround.        Importantly, we haven't analysed Fu Shou Yuan International Group's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.  

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong 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.