These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But investors can boost returns by picking market-beating companies to own shares in. For example, the D&G Technology Holding Company Limited (HKG:1301) share price is up 53% in the last year, clearly besting the market return of around 0.7% (not including dividends). So that should have shareholders smiling. However, the stock hasn't done so well in the longer term, with the stock only up 22% in three years.
Given that D&G Technology Holding didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
D&G Technology Holding actually shrunk its revenue over the last year, with a reduction of 5.3%. Despite the lack of revenue growth, the stock has returned a solid 53% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. It might be well worthwhile taking a look at our free report on D&G Technology Holding's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between D&G Technology Holding's total shareholder return (TSR) and its 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. Dividends have been really beneficial for D&G Technology Holding shareholders, and that cash payout contributed to why its TSR of 53%, over the last year, is better than the share price return.
A Different Perspective
Pleasingly, D&G Technology Holding's total shareholder return last year was 53%. That's better than the annualized TSR of 7.5% over the last three years. Given the track record of solid returns over varying time frames, it might be worth putting D&G Technology Holding on your watchlist. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
D&G Technology Holding is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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 email@example.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.