COSCO SHIPPING Energy Transportation Co., Ltd. (HKG:1138) shareholders should be happy to see the share price up 12% in the last month. But if you look at the last five years the returns have not been good. In fact, the share price is down 39%, which falls well short of the return you could get by buying an index fund.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.
COSCO SHIPPING Energy Transportation became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics might give us a better handle on how its value is changing over time.
The modest 0.6% dividend yield is unlikely to be guiding the market view of the stock. Arguably, the revenue drop of 4.4% a year for half a decade suggests that the company can't grow in the long term. That could explain the weak share price.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We know that COSCO SHIPPING Energy Transportation has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think COSCO SHIPPING Energy Transportation will earn in the future (free profit forecasts).
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of COSCO SHIPPING Energy Transportation, it has a TSR of -32% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
While the broader market gained around 10% in the last year, COSCO SHIPPING Energy Transportation shareholders lost 6.7% (even including dividends) . However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 7.4% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. Before deciding if you like the current share price, check how COSCO SHIPPING Energy Transportation scores on these 3 valuation metrics.
But note: COSCO SHIPPING Energy Transportation may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.