Did You Manage To Avoid China Datang Renewable Power’s 30% Share Price Drop?
China Datang Corporation Renewable Power Co., Limited (HKG:1798) shareholders should be happy to see the share price up 10% in the last month. But over the last half decade, the stock has not performed well. After all, the share price is down 30% in that time, significantly under-performing the market.
See our latest analysis for China Datang Renewable Power
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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 half decade during which the share price slipped, China Datang Renewable Power actually saw its earnings per share (EPS) improve by 36% per year. So it doesn’t seem like EPS is a great guide to understanding how the market is valuing the stock. Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS. Due to the lack of correlation between the EPS growth and the falling share price, it’s worth taking a look at other metrics to try to understand the share price movement.
We don’t think that the 2.0% is big factor in the share price, since it’s quite small, as dividends go. Revenue is actually up 7.4% over the time period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
China Datang Renewable Power is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus 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. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, China Datang Renewable Power’s TSR for the last 5 years was -27%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
It’s nice to see that China Datang Renewable Power shareholders have received a total shareholder return of 12% over the last year. Of course, that includes the dividend. That certainly beats the loss of about 6.2% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. Before forming an opinion on China Datang Renewable Power you might want to consider these 3 valuation metrics.
We will like China Datang Renewable Power 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 HK exchanges.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.
