It hasn't been the best quarter for Huayu Expressway Group Limited (HKG:1823) shareholders, since the share price has fallen 20% in that time. But that doesn't change the fact that the returns over the last year have been pleasing. After all, the share price is up a market-beating 14% in that time.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Huayu Expressway Group was able to grow EPS by 156% in the last twelve months. It's fair to say that the share price gain of 14% did not keep pace with the EPS growth. So it seems like the market has cooled on Huayu Expressway Group, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 4.19.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
This free interactive report on Huayu Expressway Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Huayu Expressway Group'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. We note that Huayu Expressway Group's TSR, at 36% is higher than its share price return of 14%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
It's nice to see that Huayu Expressway Group shareholders have received a total shareholder return of 36% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 4.9% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Huayu Expressway Group (of which 1 is a bit unpleasant!) you should know about.
Of course Huayu Expressway Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
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